Daisy Corporation reported net income of $420,000 for 2014.Changes occurred in several balance sheet accounts as follows: Additional information:
In Daisy's 2014 statement of cash flows,net cash provided by operating activities should be
A) $476,000.
B) $485,800.
C) $492,800.
D) $499,800.

Question

Daisy Corporation reported net income of $420,000 for 2014.Changes occurred in several balance sheet accounts as follows:  Additional information:
 In Daisy's 2014 statement of cash flows,net cash provided by operating activities should be
A) $476,000. 
B) $485,800. 
C) $492,800. 
D) $499,800.

Quizplus · Accepted Answer

To calculate the net cash provided by operating activities, we need to adjust the net income for non-cash expenses and changes in working capital accounts.

Starting with net income of $420,000:

- Add back depreciation expense of $165,000 
- Subtract increase in accounts receivable of $55,000 
- Add back decrease in inventory of $35,000 
- Add back increase in prepaid expenses of $10,000 
- Add increase in accounts payable of $40,000 
- Subtract decrease in accrued expenses of $50,000

Net cash provided by operating activities = $420,000 + $165,000 - $55,000 + $35,000 + $10,000 + $40,000 - $50,000 = $485,800

Therefore, the correct answer is B) $485,800.

Daisy Corporation Reported Net Income of $420,000 for 2014