Smithson Corporation had the following selected balance sheet changes for the past year: The company's operating income during the year was $37,000. What is the net cash provided by operating activities during last year on the statement of cash flows for Smithson Corporation (using the indirect method)?
A)$22,000
B)$46,700
C)$101,700
D)$15,000

Question

Smithson Corporation had the following selected balance sheet changes for the past year:  The company's operating income during the year was $37,000. What is the net cash provided by operating activities during last year on the statement of cash flows for Smithson Corporation (using the indirect method)?
A)$22,000 
B)$46,700 
C)$101,700 
D)$15,000

Quizplus · Accepted Answer

To calculate the net cash provided by operating activities using the indirect method, we need to start with the net income and adjust for non-cash items and changes in working capital. 
Starting with net income of $32,000: 
- add back depreciation expense of $12,000 
- subtract the increase in accounts receivable of $6,000 
- add the increase in accounts payable of $4,000 
- subtract the increase in inventory of $1,000 
Net cash provided by operating activities = $32,000 + $12,000 - $6,000 + $4,000 - $1,000 = $46,000
Therefore, the best choice is B.

Smithson Corporation Had the Following Selected Balance Sheet Changes for the Past