The most recent balance sheet and income statement of Penaloza Corporation appear below: The company paid a cash dividend of $18.It did not dispose of any property,plant,and equipment.The company did not retire any bonds payable or repurchase any of its own common stock.The following questions pertain to the company's statement of cash flows. The net cash provided by (used in)operating activities for the year was:
A)$117
B)$45
C)$36
D)$116

Question

The most recent balance sheet and income statement of Penaloza Corporation appear below:   The company paid a cash dividend of $18.It did not dispose of any property,plant,and equipment.The company did not retire any bonds payable or repurchase any of its own common stock.The following questions pertain to the company's statement of cash flows. The net cash provided by (used in)operating activities for the year was:
A)$117 
B)$45 
C)$36 
D)$116

Quizplus · Accepted Answer

To calculate the net cash provided by (used in) operating activities, we start with net income and make adjustments for non-cash items and changes in current assets and liabilities. Adjustments for non-cash items include depreciation expense of $25, gain on sale of equipment of $0, and increase in accounts payable of $10. Changes in current assets and liabilities include increase in accounts receivable of $5, decrease in inventory of $2, and decrease in prepaid expenses of $5. Summing all these adjustments, we get $45. Finally, we subtract the cash dividend paid of $18 to arrive at the net cash provided by (used in) operating activities of $117 ($45 - $18 = $117). Therefore, the best choice is A.

The Most Recent Balance Sheet and Income Statement of Penaloza