Derrald Company's financial statements show the following items. Sales..................................................................... $200,000 Wage expense......................................................... 80,000 Accounts receivable increase

Derrald Company's financial statements show the following items.

Sales..................................................................... $200,000

Wage expense......................................................... 80,000

Accounts receivable increase................................ 36,000

Loss on sale of equipment..................................... 13,000

Rent revenue........................................................... 50,000

Cash collected for rent........................................... 72,000

Dividends (declared and paid)............................... 40,000

Cash paid for wages................................................ 45,000

Depreciation expense............................................ 25,000

Derrald has no other revenues or expenses. What is Derrald’s net cash flow from operating activities? Write the dollar amount of your answer. (Do not write the dollar sign.)

Expert Solution

CASH FLOW FROM OPERATING ACTIVITES
Particulars	Amount	Amount
Cash Inflows
Sales	200,000
Cash collected for rent	72,000
		272,000
Cash Outflows
Cash paid for wages	45,000
		45,000
Net Cash Inflow from Operating Activities		227,000

Notes

1) Wage Expense and Rent Revenue is not considered since it does not affect cash.
Only collection and payment of the same are taken.
2) Increase in accounts receivable also does not affect cashflows.
It indicates an increase in credit sales.
3) Loss on sale of equipment is a non-cash expense. Hence not included.
4) Depreciation is also non-cash expense.
5) Dividends declared and paid is a financing activity, not an operating activity.

ekkarill92 answered 2 years ago

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