Exhibit 22-3 The balance sheet accounts and other information related to those accounts are presented below for Tony Company:
Additional information related to 2011 activities:
1. Net loss for 2011 was $ \$ 40,000 $.
2. Cash dividends of $ \$ 12,000 $ were declared and paid in 2011.
3. 4,000 shares of comunon stock were issued to bonchalders converting bonds payable into common stock.
4. A long-term investment was sold for $ \$ 100,000 $ cash
5. Equipment costing $ \$ 100,000 $ and having accumulated depreciation of $ \$ 30,000 $ was sold for $ \$ 50,000 $ cash

- Refer to Exhibit 22-3.Net cash provided (used)in the operating activities section of Tony's 2011 statement of cash flows was
A)$(40, 000)
B)$ 50, 000
C)$ 52, 000
D)$ 56, 000

Question

Exhibit 22-3 The balance sheet accounts and other information related to those accounts are presented below for Tony Company:
 Additional information related to 2011 activities:
1. Net loss for 2011 was $ \$ 40,000 $.
2. Cash dividends of $ \$ 12,000 $ were declared and paid in 2011.
3. 4,000 shares of comunon stock were issued to bonchalders converting bonds payable into common stock. 
4. A long-term investment was sold for $ \$ 100,000 $ cash
5. Equipment costing $ \$ 100,000 $ and having accumulated depreciation of $ \$ 30,000 $ was sold for $ \$ 50,000 $ cash
 
- Refer to Exhibit 22-3.Net cash provided (used)in the operating activities section of Tony's 2011 statement of cash flows was
A)$(40, 000) 
B)$ 50, 000 
C)$ 52, 000 
D)$ 56, 000

Quizplus · Accepted Answer

Net cash provided (used)in the operating activities section can be calculated using the indirect method. Starting with net income of $28,000, we add back non-cash expenses such as depreciation ($10,000) and amortization ($2,000), and adjust for changes in current assets and liabilities. We see that accounts receivable decreased by $18,000, inventory increased by $4,000, accounts payable increased by $6,000, and income taxes payable increased by $2,000. Adding these adjustments together, we get $(40,000), which represents net cash provided (used) in operating activities. Therefore, the best choice is C.

Exhibit 22-3 the Balance Sheet Accounts and Other Information Related $40,000 \$ 40,000 $40,000

Exhibit 22-3 the Balance Sheet Accounts and Other Information Related $\$ 40,000$