Question

Increase in Accounts Receivable Increase in Salaries Payable Decrease in Inventory Depreciation Expense Increase in Prepaid Insurance SAVEU Lense Laboratories' net income was $270,000. Given the account information below, what is the net cash flows from operating activities for Lense Laboratories? Multiple Choice Rock S $63,000 $56,000 $32,500 $48,500 $ 3,300​

Answer 1

Given the account information, the net cash flows from operating activities are $340,700.

The net cash flows from operating activities indicate the additional cash generated from operations.

We can compute the net cash flows from operating activities as follows:

Net Income + Non-Cash Items + Changes in Working Capital.

Net income = $270,000

Increase in Accounts Receivable = $63,000

Increase in Salaries Payable = $56,000

Decrease in Inventory = $32,500

Depreciation Expense = $48,500

Increase in Prepaid Insurance = $3,300

Cash Flow from Operations:

Net Income $270,000

Non-Cash Items:

Depreciation Expense 48,500

Changes in Working Capital:

Increase in Accounts Receivable (63,000)

Increase in Salaries Payable 56,000

Decrease in Inventory 32,500

Increase in Prepaid Insurance (3,300)

Net cash flows from operating activities $340,700

Thus, Lense Laboratories' net cash flows from operating activities are $340,700.