Packard Company Engaged in the Following Transactions During Year 1

question 130

Multiple Choice

Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.) 1) Acquired $1,450 cash from the issue of common stock.2) Borrowed $920 from a bank.3) Earned $1,150 of revenues.4) Paid expenses of $350.5) Paid a $150 dividend.
During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.)
1) Issued an additional $825 of common stock.2) Repaid $570 of its debt to the bank.3) Earned revenues of $1,250.4) Incurred expenses of $560.5) Paid dividends of $200.
What is the net cash inflow from operating activities that will be reported on Packard's statement of cash flows for Year 1?

• A)$800
• B)$1,570
• C)$1,150
• D)$650

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Definitions:

Preexisting Duty

An obligation that a party is already legally bound to, which cannot serve as consideration for a new contract.

Forbearance to Sue

An agreement or arrangement where a party chooses not to pursue legal action in exchange for some form of compensation or under specific conditions.

Legal Claim

A formal assertion by a party seeking judicial relief due to another party's action or failure to act in accordance with the law.

Promisor

An individual or entity who makes a promise or agreement to perform a specified act or service for a promisee.