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11 February, 15:54

Bellingham Inc had the following activity last year:

Sales $300,000;

Cost of goods sold $170,000;

Depreciation expense $25,000;

other selling and administrative expenses $95,000;

income tax expense $3,000.

What was the estimated net cash flow for the year?

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  1. 11 February, 19:37
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    The net cash flow of the year amounts to $32,000

    Explanation:

    The net cash flow of the year is computed as:

    Net cash flow = Net income + Depreciation

    = $7,000 + $25,000

    = $32,000

    Where

    Net Income is computed as:

    Net Income = Sales - COGS (Cost of goods sold) - Depreciation expense - Selling and administrative expense - Income tax expense

    = $300,000 - $170,000 - $25,000 - $95,000 - $3,000

    = $7,000
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