Answer:
$26,000
Explanation:
Operating activities: It includes those transactions which affect the working capital after net income. The increase in current assets and a decrease in current liabilities would be deducted whereas the decrease in current assets and an increase in current liabilities would be added.
These changes in working capital would be adjusted. Moreover, the depreciation expense is added to the net income
The computation of the cash flows from operations is shown below:
Cash flow from Operating activities
Net income $20,000
Adjustments made:
Add: Depreciation expense $7,000
Less: Gain on sale of machinery - $3,000
Add: Loss from the retirement of notes $2,000
Net Cash flow from Operating activities $26,000
