Question

Innovative Products reported net income of $222,000. Beginning and ending inventory balances were $45,000 and $46,000, respectively. Accounts Payable balances at the beginning and end of the year were $38,500 and $35,500, respectively. Assuming that all relevant information has been presented, the company would report net operating cash flows of:

Answer 1

net operating cash flows = $218000

Step-by-step explanation:

given data

net income = $222,000

Beginning inventory = $45,000

ending inventory = $46,000

Beginning Accounts payable = $38,500

ending Accounts payable = $35,500

to find out

net operating cash flows

solution

first we get here Increase in Inventory that is

Increase Inventory = ending inventory - Beginning inventory .......................1

put here value

Increase Inventory = $46,000 - $45,000

Increase Inventory = $1000

and

Decrease in Accounts payable will be here as

Decrease in Accounts payable = Beginning Accounts payable - ending Accounts payable ........................2

put here value we get

Decrease in Accounts payable = $38,500 - $35,500

Decrease in Accounts payable = $3000

so net operating cash flows will be

net operating cash flows = Net Income - Increase Inventory - Decrease in Accounts payable .......................3

put here value

net operating cash flows = $222,000 - $1000 - $3000

net operating cash flows = $218000