**Question 5: Calculation of Net Income Using Cash Flow Data**The net cash provided by operating activities in Fox Company's statement of cash flows for 2020 was $310,000. For 2020, depreciation on plant assets was $90,000, amortization of patent was $16,000, and cash dividends paid on common stock was $108,000. Based only on the information given above, Fox Company’s net income for 2020 was:a. $310,000 b. $204,000 c. $16,000 d. $312,000 **Detailed Explanation:**- **Net Cash Provided by Operating Activities (A):** $310,000 - **Add Depreciation (Non-cash Expense) (B):** $90,000 - **Add Amortization (Non-cash Expense) (C):** $16,000 The formula to adjust net cash provided by operating activities to find net income is:\[ \text{Net Income} = A + B + C \]\[ \text{Net Income} = \$310,000 + \$90,000 + \$16,000 \]\[ \text{Net Income} = \$416,000 \]**Note:** Cash dividends paid on common stock are not factored into the calculation of net income as they are distributions of profit, not expenses or cash flows from operating activities.Thus, based solely on the given information, the net income for Fox Company for 2020 is not directly listed among the provided options. Typically, dividends are not included in income calculations but if the provided options are correct, there might be some misunderstanding in the problem context or additional hidden data not shared in the problem statement.**However, if the question includes only these options, selection should be based on the immediate understanding of net cash adjustments.**

Formulas: Net income = Operating cash flow - Depreciation - Amortization

The net cash provided by operating activities in Fox Company's statement of cash flows for 2020 was $310,000. For 2020, depreciation on plant assets was $90,000, amortization of patent was $16,000, and cash dividends paid on common stock was $108,000. Based only on the information given above, Fox's net income for 2020 was a. $310,000. b. $204,000. c. $ 16,000. d. $312,000.

The net cash provided by operating activities in Fox Company's statement of cash flows for 2020 was $310,000. For 2020, depreciation on plant assets was $90,000, amortization of patent was $16,000, and cash dividends paid on common stock was $108,000. Based only on the information given above, Fox's net income for 2020 was a. $310,000. b. $204,000. c. $ 16,000. d. $312,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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