Assume the perpetual inventory method is used.1) Green Company purchased merchandise inventory that cost $17,500 under terms of 2/10, n/30 and FOB shipping point.
2) The company paid freight cost of $750 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 $26,500 cash and delivered under terms FOB shipping point with freight cost amounting to $550 paid by Green company.
As a result of the above transactions of Green Company, the net cash flow from operating activities was:
A. $9350 inflow.
B. $26,500 inflow.
C. $18,450 outflow.
D. $8050 inflow.
Answer: D
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