Question

Net cash flow from operating activities for 2021 Altoona Corporation was $300,000. The following items are reported on the financial statements for 2021: Depreciation and amortization $24,000 Cash dividends paid on common stock $10,000 Increase in accounts receivable $20,000 Based only on the information above, Altoona’s Net Income for 2021 was:

Answer 1

Answer:

Altoona’s Net Income for 2021 was:  $296,000

Explanation:

The Net Income can be determined by reconciling the Net cash flow from operating activities to Operating Profit as follows :

Net cash flow from operating activities    $300,000

Less Depreciation and amortization          ($24,000)

Add  Increase in accounts receivable        $20,000

Operating Profit                                          $296,000

Notes :

Reconcile the non-cash items previously added or deducted from Net cash flow from operating activities and any changes to Working Capital accounted for in determination of Net cash flow from operating activities .