Question

7 Use the following Baycraft Ltd. information for questions 7 through 10. Under the indirect method, net cash provided by operating activities would be (10 Points) Net Income Depreciation Expense Payment of Dividends Increase in Accounts Receivable Collection of Notes Receivable Loss on Sale of Land $47,000 Decrease in Inventories 8.000 Increase in Accounts Payable 2,000 Acquisition of Equipment 4,000 Sale of Shares 6,000 Payment of Long-Term Debt 12,000 Proceeds from Sale of Land $ 2,000 7,000 24,000 3,000 9,000 36.000 a. $72,000. b. $76,000. c. $83,000. d. $84,000.

Answer 1

Answer

Calculation of net cash flow provided by operating activities

Particulars	$
Net income	47,000
Add loss on sale of land	12,000
Add Depreciation expense	8,000
Add Decrease in inventory	2,000
Less Increase in account receivables	(4,000)
Add increase in account payable	7,000
Net cashflow from operating activities	72,000

Cash inflow from operating activities is $72,000.

* Note receivables collection is not taken in operating cash flow , it is taken in investing activities.

* payment of dividend, sales of shares is taken only in financing activities.

* acquisition of equipment, payment of long term debt, proceed from sale of land are taken only in investing activities.

$72,000 is ths Net cash inflow from operating activities.

Option a $72,000 is correct

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