Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.)1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank.
3) Earned $650 of revenues cash.
4) Paid expenses of $250.
5) Paid a $50 dividend.During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.)1) Issued an additional $325 of common stock.
2) Repaid $220 of its debt to the bank.
3) Earned revenues of $750 cash.
4) Incurred expenses of $360.
5) Paid dividends of $100.
What is the net cash inflow from operating activities on Packard's statement of cash flows for Year 2?
A) $390
B) $650
C) $350
D) $820

Question

Quizplus · Accepted Answer

Net cash inflow from operating activities includes revenues earned and expenses incurred. For Year 2, revenues were $750 and expenses were $360. Thus, net cash inflow from operating activities = $750 - $360 = $390.

Packard Company Engaged in the Following Transactions During Year 1