Answer:
$104,000
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.
As such,
Cash provided by operating activities
= $10,000 + $40,000 + $12,000 + $35,000 - $1,000 + $8,000
= $104,000
Answer:
Cash was provided by operating activities is $84,000.
Explanation:
To arrive at the cash was provided by operating activities, we need to prepare an extract of statement of cash flows (operating activities) as follows:
Statement of cash flows (extract)
Net loss ($10,000)
Add: Depreciation $40,000
Decrease in accounts receivable $12,000
Decrease in inventories $35,000
Increase in accounts payable $8,000
Less: Increase in prepaid expenses $1,000
Net cash flows from operating activities $84,000
Note that the purchase of treasury stock of $50,000 belongs to cash flows from financing activities.
