The net income for Clear Sky Corporation was 120 million for

The net income for Clear Sky Corporation was $120 million for the year ended December 31, 2018.

Related information follows:

Amortization of trademark $ 1 million

Cash dividends paid 10 million

Decrease in accounts receivable 8 million

Decrease in salaries payable 4 million

Depreciation expense 15 million

Increase in long-term {non-trade} notes payable 12 million

Sale of preferred stock for cash 16 million

Gain on sale of land 2 million

Cash flows from operating activities during 2018 should be reported as:

A) $138 million. B) $142 million. C) $146 million. D) $154 million.

Please explain how to come up with answer

Solution

Solution: $138 million

Working:

Cash flows from operating activities = $120 million + $1 million (amortization of patent) + $8 million (decrease in accounts receivable) - $4 million (decrease in salaries payable) + $15 million (depreciation expense) - $2 million (sale of land)

= $138 million