Jackson Company gathered the following data to prepare its 20X7 statement of cash flows:
Profit $40,000
Depreciation expense 5,000
Trade receivables decrease 3,000
Wages payable increase 4,000
Amortization of patent 1,000
Income tax payable decrease 2,000
Based only on the above data, the net cash inflow from operating activities during 20X7 was which of the following?
A - $51,000.
B - $53,000.
C - $45,000.
D - $43,000.
Any decrease in accounts receivable is to be added to the net profit where is any increase in payable will also be added in the profit. Depreciation and amortization and non cash activities and therefore they are added back to the net profit. Decrease in tax payable is to be reduced from the net profit
Cash flow from operating activities
Net profit =. 40,000
Depreciation = 5,000
Decrease in trade receivables = 3,000
Increase in payable = 4,000
Amortization of patent = 1,000
Income tax payable decrease = (2,000)
Net cash flow from operating activities
= 40,000 + 5,000 + 3,000 + 4,000 + 1,000 - 2,000
= $51,000
So the correct option is A
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