An Analyst Compiled the Following Information for U Inc

question 151

Multiple Choice

An analyst compiled the following information for U Inc. for the year ended December 31, 2018: Net income was $1,700,000.
Depreciation expense was $400,000.
Interest paid was $200,000.
Income taxes paid were $100,000.
Common stock was sold for $200,000.
Preferred stock (8% annual dividend) was sold at par value of $250,000.
Common stock dividends of $50,000 were paid.
Preferred stock dividends of $20,000 were paid.
Equipment with a book value of $100,000 was sold for $200,000.
Using the indirect method, what was U Inc.'s net cash flow from operating activities for the year ended December 31, 2018?

• A) $2,000,000.
• B) $2,030,000.
• C) $2,080,000.
• D) $2,100,000.

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Definitions:

Retail Inventory Method

An accounting method used to estimate the ending inventory and cost of goods sold of a retail company by using a cost-to-retail price ratio.

Days' Sales in Inventory

An economic indicator that calculates the mean duration in days a business requires to sell off its stock.

Specific Identification Method

An inventory valuation method that tracks the cost of each individual item in inventory.

Consignor

The person or entity that owns goods on consignment and sends them to the consignee for sale or display.