Question

Astoria Co. had the following transactions during the month of August:

-Cash received from the bank loan was $20,000
-Dividends of $9,500 were paid to stockholders in cash.
-Revenues earned and received in cash amounted to $33,500
-Expenses incurred and paid were $26,000.

A statement of cash flows for August, would report net cash flows from operating activities for Astoria were:

Answer 1

Astoria Co.'s net cash flows from operating activities for the month of August would be $7,500, calculated by subtracting the cash paid for expenses ($26,000) from the cash received from revenues ($33,500).

Step-by-step explanation:

The student has provided details of various cash transactions for Astoria Co. during the month of August and seeks to determine the net cash flows from operating activities. To calculate this, one must consider revenues, expenses, and changes in working capital, but not the cash transactions related to financing activities (like the bank loan and dividends paid). The relevant transactions for operating activities are the revenues earned and received in cash of $33,500 and the expenses incurred and paid of $26,000.

To calculate the net cash flow from operating activities, we subtract the total expenses from the total revenues:

• Revenues (cash received): $33,500
• Expenses (cash paid): $26,000

Net cash flows from operating activities = Revenues - Expenses

Net cash flows from operating activities = $33,500 - $26,000

Net cash flows from operating activities = $7,500