Assume the perpetual inventory method is used.
1) Green Company purchased merchandise inventory that cost $64,000 under terms of 2/10, n/30 and FOB shipping point.
2) The company paid freight cost of $2,400 to have the merchandise delivered.
3) Payment was made to the supplier within 10 days.
"4) All of the merchandise was sold to customers for $94,000 cash and delivered under terms FOB shipping point with freight cost amounting to $1,600 paid by Green company.
As a result of the above transactions of Green Company, the net cash flow from operating activities was:"

Question

Quizplus · Accepted Answer

The net cash flow from operating activities is calculated as cash inflow from sales ($94,000) minus cash outflows for inventory purchase ($62,720 after discount), freight-in ($2,400), and freight-out ($1,600), resulting in a net inflow of $27,280.

Assume the Perpetual Inventory Method Is Used