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 $30,000
Cash dividends paid on common stock 18,000
Increase in accounts receivable 36,000
Based only on the information above, Graham’s net income for 2018 was:_______.
a. $501,000.
b. $429,000.
c. $441,000.
d. $489,000.

Answer 1

Answer:

$306,000

Explanation:

Calculation for Graham’s net income for 2018

Using this formula

NET INCOME=Net cash flow from operating activities+(Depreciation and amortization -

Increase in accounts receivable )

Let plug in the formula

NET INCOME=$300,000+($30,000-$36,000)

NET INCOME=$300,000+$6,000

NET INCOME=$306,000

Therefore Graham’s net income for 2018 will be $306,000