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13 April, 14:55

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $66,000 2) borrowed $38,000 from its bank 3) provided consulting services for $64,000 cash 4) paid back $28,000 of the bank loan 5) paid rent expense for $15,500 6) purchased equipment for $25,000 cash 7) paid $4,300 dividends to stockholders 8) paid employees' salaries of $34,000 What is Yowell's net cash flow from operating activities?

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  1. 13 April, 16:37
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    The Yowell's net cash flow from operating activities is $14,500

    Explanation:

    In the direct method, the operating activities record revenues and expenses which are earned and incurred during a particular year.

    The computation of the net cash flow from operating activities is shown below:

    = Consulting services revenue - rent expense - employees' salaries expense

    = $64,000 - $15,500 - $34,000

    = $14,500

    The other items which are mentioned in the question are related to the investing and the financing activities. So, these items would not be considered in the computation part.
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