Pacifica Company recorded the following cash transactions for the year: Paid $255000 for salaries.
Paid $60000 to purchase equipment.
Collected $7200 from the sale of investments
Repaid $48000 of loan principle
Paid $220000 for other operating expenses.
Paid $112000 in dividends.
Collected $652000 from customers.
What was Pacifica's net cash provided (used) by operating activities?

Question

Quizplus · Accepted Answer

To calculate the net cash provided (used) by operating activities, we need to add the cash collected from customers ($652,000) and subtract the cash paid for salaries ($255,000), other operating expenses ($220,000) and dividends ($112,000). The net cash provided by operating activities is therefore:

$652,000 - $255,000 - $220,000 - $112,000 = $65,000

Therefore, option A is incorrect as the amount of net cash provided by operating activities is much higher. Option B is the correct answer. Option C and D are both incorrect as they do not reflect the actual calculation of net cash provided by operating activities.

Pacifica Company Recorded the Following Cash Transactions for the Year