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.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 $750.4)Incurred expenses of $360.5)Paid dividends of $100.
What is the net cash inflow from operating activities that will be reported on Packard's statement of cash flows for Year 1?
A)$400
B)$650
C)$350
D)$820

Question

Quizplus · Accepted Answer

Net cash inflow from operating activities is calculated as cash received from revenues minus cash paid for expenses. For Year 1, this is $650 (revenues) - $250 (expenses) = $400.

Packard Company Engaged in the Following Transactions During Year 1