Question

Mohammed Corporation's comparative balance sheet for current assets and liabilities was as follows:

                                                   Dec. 31, Year 2                    Dec. 31, Year 1 Accounts receivable                     $14,500                              $12,300 Inventory                                       48,800                               57,400

 Accounts payable                         11,600                               10,200

Dividends payable                        23,000                               24,000

Adjust net income of $107,300 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.

Answer 1

 

CASH FLOW FROM OPERATING ACTIVITIES	Amount
Net Income	107300
Increase in Accounts Receivable (14500-12300)	-2200
Decrease in Inventory (48800-57400)	8600
Increase in Accounts Payable (11600-10200)	1400
NET CASH FLOW FROM OPERATING ACTIVITIES	$115100
Dividends payable is a financing activity

Therefore ,NET CASH FLOW FROM OPERATING ACTIVITIES IS  $115100

 

1.The effect on Accounts receivable ,Inventory and accounts payable is adjusted to arise at the Cash flow of Operating activities .Dividend payable is a financing activity .

NET CASH FLOW FROM OPERATING ACTIVITIES IS  $115100