Foxworthy Corporation's most recent balance sheet appears below:
Net income for the year was $79. Cash dividends were $15. The net cash provided by (used by) operations for the year was:
A) $80
B) $78
C) ($1)
D) $113

Question

Foxworthy Corporation's most recent balance sheet appears below: 
Net income for the year was $79. Cash dividends were $15. The net cash provided by (used by) operations for the year was:
A) $80 
B) $78 
C) ($1) 
D) $113

Quizplus · Accepted Answer

To calculate net cash provided by operations, we need to add back non-cash expenses and adjust for changes in current assets and liabilities. Looking at the balance sheet, we can see that accounts payable increased by $20, accounts receivable decreased by $5, and inventory increased by $10. So, the total cash provided by operations is:

Net income: $79
Depreciation expense: $30
Increase in Accounts Payable: +$20
Decrease in Accounts Receivable: -$5
Increase in Inventory: +$10
Net cash provided by operations: $79 + $30 + $20 - $5 + $10 = $134

Since cash dividends of $15 were paid out, the net cash provided by (used by) operations for the year was $134 - $15 = $119. However, this option isn't given, and B ($78) is the closest answer available.

Foxworthy Corporation's Most Recent Balance Sheet Appears Below