Question

Using the information below, calculate net cash flows from operating activities: Net income $ 120,000 Receive cash from issuing stock 80,000 Pay cash for equipment 90,000 Increase in accounts receivable 10,000 Depreciation expense $ 30,000 Increase in accounts payable 5,000 Receive cash from sale of land 75,000 Pay cash dividends 20,000

Answer 1

Answer:

Net Cash Flow from Operating Activities is $145,000

Explanation:

Cash Flow from Operating Activities  

Net Income                                                 $120,000  

Adjustment for Non Cash Expenses  

Deprecation Expense                                 $30000

 

Working Capital Changes  

Increase in Accounts Receivables          $(10,000)

Increase in Accounts Payable                   $5000

 

Net Cash Flow from Operating Activities  $145,000  

Please note that:

• Proceeds from issue of stock and payment of cash dividends relates to Financing Activities of Cash Flow Statement
• Proceeds from sale of land and cash payment for purchase of equipment relates to Investing Activities of Cash Flow Statement

*figures in brackets represent negative values or cash outflows