An analyst compiled the following information for U Inc. for the year ended December 31, 2018: Net income was $1,700,000.
Depreciation expense was $400,000.
Interest paid was $200,000.
Income taxes paid were $100,000.
Common stock was sold for $200,000.
Preferred stock (8% annual dividend) was sold at par value of $250,000.
Common stock dividends of $50,000 were paid.
Preferred stock dividends of $20,000 were paid.
Equipment with a book value of $100,000 was sold for $200,000.
Using the indirect method, what was U Inc.'s net cash flow from operating activities for the year ended December 31, 2018?
A) $2,000,000.
B) $2,030,000.
C) $2,080,000.
D) $2,100,000.

Question

Quizplus · Accepted Answer

Cash flows from operations using the indirect method are computed by taking net income plus noncash expenses ) = $2,000,000. Note that interest and income taxes paid are expenses shown on the income statement and will already be factored into net income. The other information relates to financing and investing cash flows.

An Analyst Compiled the Following Information for U Inc