Garret Company has provided the following selected information for the year ended December 31, 2014: Cash collected from customers was $783,000.
Cash received from stockholders in exchange for common stock totaled $91,000.
Cash paid to suppliers was $361,000.
Cash paid to employees was $204,000.
Cash to stockholders for dividends was $33,000.
Cash received from sale of a building was $250,000.
Cash paid for rent was $39,000.
Cash received for interest and dividends was $7,000.
Cash paid for income taxes was $55,000.
Based on the selected information provided, how much was Garret's cash flow from operating activities?
A) $131,000.
B) $98,000.
C)$381,000.
D)$222,000.

Question

Quizplus · Accepted Answer

To calculate the cash flow from operating activities, we need to start with the net income and make adjustments for any non-cash items and changes in working capital. However, no information about net income is provided in the question. Alternatively, we can use the indirect method by adjusting the cash collected from customers for other cash inflows and outflows related to operating activities.

Cash collected from customers = $783,000
Cash paid to suppliers = $361,000
Cash paid to employees = $204,000
Cash paid for rent = $39,000
Cash paid for income taxes = $55,000

Cash flow from operating activities = Cash collected from customers - Cash paid to suppliers - Cash paid to employees - Cash paid for rent - Cash paid for income taxes 
= $783,000 - $361,000 - $204,000 - $39,000 - $55,000 
= $131,000

Therefore, the correct answer is A) $131,000.

Garret Company Has Provided the Following Selected Information for the Year