Question

An analyst compiled the following information for U Inc. for the year ended December 31, 2021: Net income was $1,960,000. Depreciation expense was $530,000. Interest paid was $265,000. Income taxes paid were $132,500. Common stock was sold for $226,000. Preferred stock (8% annual dividend) was sold at par value of $276,000. Common stock dividends of $76,000 were paid. Preferred stock dividends of $22,080 were paid. Equipment with a book value of $126,000 was sold for $252,000. Using the indirect method, what was U Inc.'s net cash flow from operating activities for the year ended December 31, 2021

Answer 1

Answer:

$2,364,000

Explanation:

cash flow from operating activities

Net Income -                         1960000

Add back depreciation -      530000

Gain on disposal of assets   (126000)

                                                $ 2364000

Statement of cash flow is a statement analyzing the the availability of cash and cash equivalent for the accounting period under the operating , investing and financial activities.

In preparing the statement of cash flow . non cash expenses are added back to the net income whine non cash revenue are deducted.

Interest paid and income tax paid are already treated in arriving at the net income , hence are are neither added or deducted from the net income