Question

Paper Co. had net income of $70,000 during the year. Dividend payment was $10,000. The followinginformation is available:Mortgage repayment $20,000Available-for-sale securities purchased 10,000 increaseBonds payable - issued 50,000 increaseInventory 40,000 increaseAccounts payable 30,000 decreaseWhat amount should Paper report as net cash provided by operating activities in its statement of cash flowsfor the year under U.S. GAAP?

Answer 1

Answer:

net cash provided by operating activities 60,000

Explanation:

net income  70,000

Change in working Capital

Increase Inventory (40,000)

Increase Account payable 30,000

Net change in working capital  (10,000)

net cash provided by operating activities 60,000

The working capital is the current asset and current liabilities.

the dividend, bonds and mortgare are not operating activities.

the securities are considered cash.