Question

ABC Company is a manufacturing firm. At the beginning of July, ABC had a total inventory balance of $48,000. During the month of July, ABC had the following transactions.Purchased raw materials costing $6,000Paid office staff salaries of $1,000Paid production staff salaries of $3,000Purchased office equipment costing $37,000Purchased production equipment costing $21,000Recognized $5,000 depreciation on the office equipmentRecognized $2,000 depreciation on the production equipmentSold $25,000 worth of finished goods for $72,000 cashAssume all transactions, except depreciation, are for cash.What is ABC Company's Net Cash Flow from Operating Activities?

Answer 1

Answer:

ABC Company's Net Cash Flow from Operating Activities is $4,000

Explanation:

Cash inflow from Operating Activities = Cash from sold finished goods = $72,000

Cash outflow from Operating Activities = Cash purchased raw materials + Cash Paid office staff salaries + Cash Paid production staff salaries + Cash Purchased office equipment + Cash Purchased production equipment = $6,000 + $1,000 + $3,000 + $37,000 + $21,000 = $68,000

Net Cash Flow from Operating Activities = Cash in from Operating Activities - Cash out from Operating Activities = $72,000 - $68,000 = $4,000