Question

Rachel's Recordings reported net income of $270,000. Beginning balances in Accounts Receivable and Accounts Payable were $17,000 and $21,000 respectively. Ending balances in these accounts were $9,500 and $28,000, respectively. Assuming that all relevant information has been presented, Rachel's net cash flows from operating activities would be:

Answer 1

Cash flow from operating activities 284,500

Step-by-step explanation:

net income 270,000

change in AR

17,000- 9,500 = 7,500(A)

change in AP

28,000 - 21,000 = 7.,000(B)

total change in working capital 14,500

Cash flow from operating activities 284,500

(A)

The account receivable decrease over time this means the account were collected, whch increase cash

(B)

The account payable increase, which means the company receive cash or delay the payment of cash for this period of time. Therefore, the cash increase.