Question

Bellingham Inc had the following activity last year:

Sales $300,000;
Cost of goods sold $170,000;
Depreciation expense $25,000;
other selling and administrative expenses $95,000;
income tax expense $3,000.
What was the estimated net cash flow for the year?

Answer 1

The net cash flow of the year amounts to $32,000

Step-by-step explanation:

The net cash flow of the year is computed as:

Net cash flow = Net income + Depreciation

= $7,000 + $25,000

= $32,000

Where

Net Income is computed as:

Net Income = Sales - COGS (Cost of goods sold) - Depreciation expense - Selling and administrative expense - Income tax expense

= $300,000 - $170,000 - $25,000 - $95,000 - $3,000

= $7,000