Question

1. Henry Corporation reported the following transactions for 2016:

   1.	Sold equipment for $28,000. The original cost was $60,000; the book value is $24,000
   2.	Issued 2,000 shares of $20 par value common stock for $48 per share
   3.	Paid $12,000 for an Insurance policy which goes into effect in January 2017
   4.	Recognized $8,000 in Interest expense on Dec 31, 2016 - to be paid on April 30, 2017
   5.	Received $32,000 as collections from customers for 2015 sales, and $72,000 for 2016 sales
   6.	Reacquired 300 shares of its own common stock at $80 per share
   7.	Received $8,000 in dividends on stock held as available for sale
   8.	Recorded depreciation expense for $20,000
   9.	Paid $4,000 of dividends to common stockholders
   10.	Purchased equipment costing $260,000, by making a cash down payment of $80,000 and signing a note for the remaining $180,000.
   11.	Acquired a building with a market value of $1,000,000 by issuing 20,000 shares of common stock.
   12.	Paid salaries of $72,000
   13.	Cash received from sale of available for sale securities $24,000
   14.	Repaid a loan, which included $20,000 of the principal and $4,000 in interest

   
   Henry Corporation uses the direct method for preparing the 2016 Statement of Cash Flows.
   
   The net cash flow from operating activities is:

   	A.	$ 16,000
   	B.	$(32,000)
   	C.	$ 24,000
   	D.	$ 4,000

Answer 1

Cash received from customers ($32,000+$72,000)	$ 104,000
Cash paid for salaries	$ (72,000)
Cash paid for insurance	$ (12,000)
Cash paid for interest	$    (4,000)
net cash flow from operating activities	$    16,000

Answer is A. $16,000

You can reach me over comment box if you have any doubts. Please rate this answer