Question

An analyst compiled the following information for Uver Inc. for the year ended December 31, 2016: ▪ Net income was $1,700,000.▪ Depreciation expense was $400,000. ▪ Interest paid was $200,000. ▪ Income taxes paid were $100,000. ▪ Common stock was sold for $200,000. ▪ Preferred stock (8% annual dividend) was sold at par value of $250,000. ▪ Common stock dividends of $50,000 were paid. ▪ Preferred stock dividends of $20,000 were paid. ▪ Equipment with a book value of $100,000 was sold for $200,000. Using the indirect method, what was Uver Inc.'s net cash flow from operating activities for the year ended December 31, 2016?

Answer 1

$2,000,000

Step-by-step explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $1,700,000

Adjustment made:

Add : Depreciation expense $400,000

Less: Gain on sale of equipment -$100,000 ($200,000 - $100,000)

Total of Adjustments $300,000

Net Cash flow from Operating activities $2,000,000