The following information is related to Towson Company's fiscal year 2018.
Income Statement:
Net Income $4,000,000
Depreciation Expense 300,000
Loss on Sale of Plant Assets 25,000
Interest Expense 5,000
Balance Sheet - 12/31/17: Increase (Decrease)
Accounts Payable decrease 50,000
Plant Assets - Purchased 250,000
Plant Assets - Disposals (100,000)
Additional Information:
Common Stock exchanged for outstanding Long Term Notes Payable of $125,000
Dividends paid were $30,000
Use this information to determine Towson Company's Net Cash Flows from Operating Activities. If the amount is an outflow then enclose the amount with dollar sign inside of brackets ( ).
Answer -
Net cash inflows from operating activities = $4275000
Calculation:
Cash flows from operating activities: | ||
Net income | $4000000 | |
Adjustment to net income | ||
Depreciation expense | $300000 | |
Loss on sale of plant assets | $25000 | |
Decrease in accounts payable | ($50000) | $275000 |
Net cash flows from operating activities | $4275000 |
Net cash flows from operating activities:
= Net income + Depreciation expense + Loss on sale of plant assets - Decrease in accounts payable
= $4000000 + $300000 + $25000 - $50000
= $4275000
Interest expense is non-operating expense therefore it’s not an operating activity.
Purchased of plant assets and disposals of plant assets both are investing activities not an operating activities.
Similarly, exchange of common stock for outstanding long term notes payable and paying dividend to the stockholders both are financing activities not an operating activities.
The following information is related to Towson Company's fiscal year 2018. Income Statement: &nb
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