Question

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Packard Company engaged in the following transactions during 2015, its first year in operations: (Assume all transactions are cash transactions.)
1) Acquired $1,400 cash from the issue of common stock.
2) Borrowed $870 from a bank.
3) Earned $1,050 of revenues.
4) Paid expenses of $340.
5) Paid a $140 dividend.
During 2016, Packard engaged in the following transactions: (Assume all transactions are cash transactions.)
1) Issued an additional $775 of common stock.
2) Repaid $535 of its debt to the bank.
3) Earned revenues of $1,200.
4) Incurred expenses of $540.
5) Paid dividends of $190
The net cash inflow from operating activities on Packard's 2015 statement of cash flows is
-$775.
-$710.
-$1,450.
-$585.

Answer 1

The net cash inflow from operating activities for Packard Company during 2015 is $710, which is obtained by subtracting the paid expenses of $340 from the earned revenues of $1,050.

Step-by-step explanation:

The student is asking about the calculation of net cash inflow from operating activities for Packard Company for the year 2015. To determine the net cash inflow from operating activities on the statement of cash flows for the given period, we sum up the cash flows associated with operating activities. These typically include revenues received from customers as well as cash paid for expenses, but exclude cash flows from investing and financing activities such as issuing stock, paying dividends, or borrowing from a bank.

In 2015, Packard Company earned $1,050 from revenues and paid $340 in expenses. Calculating the net cash inflow involves subtracting the expenses from revenues: $1,050 (revenues) - $340 (expenses). This gives us a net cash inflow of $710 from operating activities.

The option '-$710' is the correct answer to the student's question, as it represents the net cash inflow from operating activities for 2015.