Shaw Associates Uses the Indirect Method for Preparing the Statement

Shaw Associates uses the indirect method for preparing the statement of cash flows. The following accounts and balances were drawn from the company's accounting records: Net income for the period was $42,000. The net cash flows from operating activities equals:
$$\begin{array} { | l | r r | r r | } \hline \text { Account Title } &{ \text { Begining } } &&{ \text { Ending } } \\\hline \text { Accounts receivable } & \$ & 30,000 & \$ & 40,000 \\\hline \text { Prepaid insurance } & \$ & 4,600 & \$ & 1,000 \\\hline \text { Accounts payable } & \$ & 24,000 & \$ & 25,800 \\\hline \text { Unearned revenue } & \$ & 6,400 & \$ & 3,800 \\\hline\end{array}$$

A) $37,200.
B) $34,800.
C) $49,200.
D) $40,000.

Correct Answer:

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