Borden Company paid cash to purchase two identical inventory items. The first pu

Question

Borden Company paid cash to purchase two identical inventory items. The first purchase cost $18.00 cash and the second cost $19.00 cash. Borden sold one inventory item for $30.00 cash. Based on this information alone:
1. cash flow from operating activities is $11.50 assuming a weighted average cost flow.
2. cash flow from operating activities is $12.00 assuming a FIFO cost flow.
3. cash flow from operating activities is $11.00 assuming a LIFO cost flow.
4. the amount of cash flow from operating activities is not affected by the cost flow method.

Explanation / Answer

1. cash flow from operating activities is $11.50 assuming a weighted average cost flow. Net Income = 30-18.50 = 11.50

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