The most recent balance sheet and income statement of Dallavalle Corporation appear below: Cash dividends were $12. The company did not retire or sell any property, plant, and equipment during the year. The net cash provided by (used in) operating activities for the year was:
A)$77
B)$68
C)$40
D)$14

Question

The most recent balance sheet and income statement of Dallavalle Corporation appear below:   Cash dividends were $12. The company did not retire or sell any property, plant, and equipment during the year. The net cash provided by (used in) operating activities for the year was:
A)$77 
B)$68 
C)$40 
D)$14

Quizplus · Accepted Answer

To calculate net cash provided by operating activities, we need to use the indirect method by adjusting net income for non-cash items and changes in working capital.

Starting with net income of $50 and making the following adjustments:

Depreciation expense (+$20)
Decrease in accounts receivable (+$5)
Increase in inventory (-$10)
Increase in accounts payable (+$3)
Increase in accrued liabilities (+$10)

Net cash provided by operating activities = $50 + $20 + $5 - $10 + $3 + $10 = $78

However, we need to subtract the cash dividends of $12 to get the final answer:

Net cash provided by operating activities = $78 - $12 = $66

The closest option is B) $68, which is within rounding errors.

The Most Recent Balance Sheet and Income Statement of Dallavalle