ABC Company experienced the following transactions during Year 1, its first year in operation 1) Issued $9,000 of common stock to stockholders

Finance May 09, 2021

ABC Company experienced the following transactions during Year 1, its first year in operation
1) Issued $9,000 of common stock to stockholders.

2) Provided $5,300 of services on account

3) Paid $2,350 cash for operating expenses.

4) Collected $3,400 of cash from accounts receivable.

5) Paid a $250 cash dividend to stockholders,
The amount of net cash flow from operating activities shown on the company's Year 1 statement of cash flows is
Multiple Choice :
a) $800

b) $1,050
c) $2,950

Expert Solution

Computation of the amount of net cash flow from operating activities:-

Cash flow from operating expenses = Cash collection from accounts receivable - Cash paid for Operating Expenses

= $3,400 - $2,350

= $1,050

Hence, the correct option is b) $1,050

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