Question

Baker Electronics reports the following data for the year ended December 31, 2019: Cash receipt from sale of equipment $40,000 Depreciation Expense 15,000 Cash payment of Dividends 7,000 Cash receipt from issuance of Common Stock 21,000 Net Income 50,000 Cash purchase of Land 20,000 Increase in Current Liabilities 11,000 Decrease in Current Assets other than Cash 10,000 What is the cash flow from operating activities?

Answer 1

Answer:

Cash flow from operating activities amounts to $86,000

Explanation:

The cash flow from the operating activity is computed as:

Cash flow from operating activities = Net Income + Depreciation expense + Increase in current liabilities + Decrease in current assets other than cash

where

Net income is $50,000

Depreciation expense is $15,000

Increase in current liabilities is $11,000

Decrease in current assets other than cash is $10,000

Putting the values above,

= $50,000 + $15,000 + $11,000 + $10,000

= $86,000

Note: The other items are investing or financing activities.