Question

Net cash flow from operating activities for 2018 for Spencer Corporation was $450,000.

The following items are reported on the financial statements for 2018:
Cash dividends paid on common stock----------$20,000
Depreciation and amortization----------------------12,000
Increase in accounts receivable--------------------24,000
Based on the information above, Spencer's net income for 2018 was
a. $462,000.
b. $446,000.
c. $414,000.
d. $406,000.

Answer 1

The net income for 2018 for Spencer Corporation was $458,000.

Step-by-step explanation:

The net income for 2018 can be calculated using the formula: Net Income = Net Cash Flow from Operating Activities + Cash Dividends Paid on Common Stock + Depreciation and Amortization - Increase in Accounts Receivable

In this case, the net cash flow from operating activities is given as $450,000 and the cash dividends paid on common stock is $20,000, the depreciation and amortization is $12,000, and the increase in accounts receivable is $24,000. Plugging these values into the formula, we get:

Net Income = $450,000 + $20,000 + $12,000 - $24,000 = $458,000

Therefore, the net income for 2018 for Spencer Corporation was $458,000.