Question

M.Halimeh Inc. is a manufacturer of Cars spare parts in the south of the U.S.

During the year 2018, it reported a net cash flow used by operating activities of $20,000. During the same year, the firm recorded depreciation expense of $10,000 and a gain on disposal of plant assets of $3,000.

Moreover, its balance sheet showed an increase in account payable,account receivables and accruals of $2,000, $3,000 and $4,000 respectively. It also showed a decrease in inventories, notes payable and bonds payable of $5,000, $20,000 and $25,000 respectively. It also paid a dividend of $4,500 during 2018.

Based solely on the above information, what is the firms net income in 2018?

Answer 1

Calculation of Net Income
	Particulars	Amount
	cash flow from operating activities	20000
Add :	depreciation	10000
Add :	disposal of plant assets	3000
Less :	Increase in accounts payable	2000
Add:	Increase in accounts recievable	3000
Add:	Increase in accounts recievable	4000
Less:	Decrease in inventories	5000
Add:	Decrease in notes payable	20000
Net Income	53000

bonds payable and divid dividends paid will reflect in cash flow from financing activities .