Use the following financial data on Enterprise:
a. Sale of equipment $32,000
b. Loss on equipment sale $9,000
c. Dividends paid $12,500
d. Purchase of an office suite $104,000
e. Common stock repurchase $45,000
f. Dividends received from investments $8,500
g. Interest received on Treasury bonds $1,200
h. Supplier accounts paid $3,700
i. Cash collection from customers $14,200
j. Ending cash balance $98,000
The operating cash flow for 1998 was ________.
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A. B. C. D.C
Items f, g, h and i are operating events.
To calculate the operating cash flow for the given financial data, we need to consider the cash flows from operating activities. Operating cash flow represents the cash generated or used by a company's core business operations.
To calculate operating cash flow, we need to consider the following components:
Sale of equipment: The sale of equipment for $32,000 represents a cash inflow as it generates cash for the company. Therefore, we add $32,000 to the operating cash flow.
Loss on equipment sale: The loss on equipment sale of $9,000 represents an expense for the company. Since it is a non-cash item (it represents a decrease in profit but not an actual outflow of cash), we don't include it in the operating cash flow calculation.
Dividends paid: Dividends paid of $12,500 represent a cash outflow. Dividends are considered a financing activity rather than an operating activity, so we exclude it from the operating cash flow calculation.
Purchase of an office suite: The purchase of an office suite for $104,000 represents a cash outflow related to investing activities, not operating activities. Therefore, we exclude it from the operating cash flow calculation.
Common stock repurchase: The common stock repurchase of $45,000 represents a cash outflow related to financing activities. It is not included in the operating cash flow calculation.
Dividends received from investments: Dividends received from investments of $8,500 represent a cash inflow. Since it is an investing activity, we exclude it from the operating cash flow calculation.
Interest received on Treasury bonds: Interest received on Treasury bonds of $1,200 represents a cash inflow. However, since it is an investing activity, we exclude it from the operating cash flow calculation.
Supplier accounts paid: Supplier accounts paid of $3,700 represents a cash outflow and is included in the operating cash flow calculation.
Cash collection from customers: Cash collection from customers of $14,200 represents a cash inflow related to operating activities. Therefore, we add $14,200 to the operating cash flow.
Ending cash balance: The ending cash balance of $98,000 is not directly used to calculate operating cash flow. It represents the result of all cash inflows and outflows.
Now, let's calculate the operating cash flow by adding the relevant cash inflows and outflows:
$32,000 (Sale of equipment)
Operating Cash Flow = $32,000 - $3,700 + $14,200 Operating Cash Flow = $42,500
Therefore, the operating cash flow for 1998 is $42,500.
None of the provided answer choices matches the calculated operating cash flow. It seems there may be an error in either the answer choices or the data provided.