Question

Consider the following financial data for a company that is preparing its cash flow statement: Amortization expense $ 150,000 Cash dividends paid to common shareholders 75,000 Net income 1,500,000 Work-in-process inventory increase over the prior year 300,000 Gain on sale of equipment 50,000 Using the indirect method, cash flow from operating activities would be A. $1,300,000 B. $1,225,000 C. $1,375,000 D. $1,350,000

Answer 1

A. $1,300,000

Step-by-step explanation:

The computation of the cash flow from operating activities is shown below:

Net income $1,500,000

Add: Amortization expense $ 150,000

Less: increase in inventory -$300,000

less: gain on sale of equipment -$50,000

Net cash flow from operating activities $1,300,0000