Question

MC Qu. 132 In preparing a company's...

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available:

Net income for the year was	$	70,000
Accounts payable increased by		36,000
Accounts receivable decreased by		61,000
Inventories decreased by		23,000
Cash dividends paid were		32,000
Depreciation expense was		56,000

Net cash provided by operating activities was:

Multiple Choice

$246,000.

$106,000.

$60,000.

$200,000.

$107,000.

MC Qu. 133 In preparing a companys statement...

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available:

Net income for the year was	$	68,000
Accounts payable increased by		19,600
Accounts receivable decreased by		26,600
Inventories increased by		8,200
Depreciation expense was		34,800

Net cash provided by operating activities was:

Multiple Choice

$104,000.

$140,800.

$87,600.

$71,200.

$157,200.

Answer 1

Solution 1:

Cash provided by Operating Activities (Indirect method)
Net Income	$70,000
Adjustments:
Depreciation expense	$56,000
Accounts payable increase	$36,000
Accounts Receivable decrease	$61,000
Inventories decrease	$23,000
Net Cash Provided by operating activities	$2,46,000

Hence first option is correct.

Solution 2:

Cash provided by Operating Activities (Indirect method)
Net Income	$68,000
Adjustments:
Depreciation expense	$34,800
Accounts payable increase	$19,600
Accounts Receivable decrease	$26,600
Inventories Increase	-$8,200
Net Cash Provided by operating activities	$1,40,800

Hence second option is correct.