Question

- SLO-Prepare basic statements Seved Help Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $1,750 cash from the issue of common stock. 2) Borrowed $1.220 from a bank. 3) Earned $1,400 of revenues cash. 4) Paid expenses of $410 5) Paid a $210 dividend 1:29 During Year 2. Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $1125 of common stock. 2) Repaid $780 of its debt to the bank. 3) Earned revenues of $1,550 cash. 4) Incurred expenses of $680. 5) Pald dividends of $260. The net cash inflow from operating activities on Packard's statement of cash flows for Year 2 is:

Answer 1

Net cash inflow from operating activities = $ 870

Working:

Packard`s Company
Statement of Cash Flow [Indirect Method]
For the Year 2 Ended
Cash flows from operating activities:
Net Income [1550-680]		$          870
Net cash flows from operating activities		$          870

Notes:

1) As no information is provided except revenue and expenses, differences between both will be net cash flow from operating activity.

2) Issue of common stock and payment of debt and dividend will be disclosed under financing activity. So, No effect in operating activity.