Question

7. During 2020 the DLD Company had a net income of $85.000. In addition, selected accounts showed the following changes: Accounts Receivable S3,000 increase Accounts Payable 1,000 increase Buildings 4,000 decrease Depreciation Expense 1,500 increase Bonds Payable 8,000 increase What was the amount of cash provided by operating activities? A) $84,500 B) $85,000 C) $86,500 D) $94,500 1 8. Packard Corporation reports the following information: Net cash provided by operating activities $335.000 Average current li abilities 150.000 Average long-term liabilities 100.000 Dividends paid 60,000 Capital expenditures 110,000 Payments of debt 35,000 Packard's free cash flow is A) $130,000. B) $165,000. C) $225,000. D) $275,000.

Answer 1

Solution to QUESTION-7

Amount of cash provided by operating activities = Net Income + Depreciation expenses – Increase in accounts receivables + Increase in accounts payables

= $85,000 + $1,500 - $3,000 + $1,000

= $84,500

Solution to QUESTION-8

Packard’s Free Cash Flow = Net cash provided by operating activities – Capital Expenditures – Dividends paid

= $335,000 - $60,000 - $110,000

= $165,000

Solution to QUESTION-9

The total current assets = Accounts receivables + Trading securities + Cash + Inventory + Prepaid expenses

= $38,000 + $12,000 + $32,000 + $60,000 + $4,000

= $146,000