Question

Innovative Products reported net income of $224,000. Beginning and ending inventory balances were $46,000 and $47,500, respectively. Accounts Payable balances at the beginning and end of the year were $38,000 and $34,000, respectively. Assuming that all relevant information has been presented, the company would report net operating cash flows of:

Answer 1

$218,500

Step-by-step explanation:

net operating cash flows = net income + adjustments

the adjustments include: depreciation expense (which is added), any increase in accounts receivables, inventory or prepaid expenses is subtracted, any increase in accounts payable or current liabilities is added.

net operating cash flows = $224,000 - ($47,500 - $46,000) + ($34,000 - $38,000) = $224,000 - $1,500 - $4,000 = $218,500