Birchett Corporation's most recent balance sheet appears below: The company's net income for the year was $91 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $22. The net cash provided by (used in) operating activities for the year was:
A) $86
B) $5
C) $96
D) $130

Question

Birchett Corporation's most recent balance sheet appears below:  The company's net income for the year was $91 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $22. The net cash provided by (used in) operating activities for the year was:
A) $86 
B) $5 
C) $96 
D) $130

Quizplus · Accepted Answer

To calculate net cash provided by operating activities we need to use the indirect method. 
Net income: $91 
Add back non-cash expenses: 
Depreciation expense: $40 
Operating cash flow before changes in working capital: $131 
Adjust for changes in working capital: 
Accounts receivable: -$18 
Inventory: -$62 
Accounts payable: $5 
Net cash provided by operating activities: $96 
Minus cash dividends: -$22 
Net cash provided by (used in) operating activities: $74. 
Therefore, the correct option is C) $96

Birchett Corporation's Most Recent Balance Sheet Appears Below: the Company's