Question

Mullinix inc. reported the following information: net income, $55,000; decrease in accounts receivable, $12,000; decrease in accounts payable, $6,500; and depreciation expense, $10,000. what amount did mullinix report as cash flow from operating activities on its statement of cash flows? select one:

a. $50,500
b. $83,500
c. $70,500
d. $59,500

Answer 1

The cash flow from operating activities for Mullinix Inc. is calculated by starting with the net income and adjusting for changes in working capital and non-cash expenses, which results in $70,500. Therefore, the correct option is C.

Step-by-step explanation:

To calculate the cash flow from operating activities for Mullinix Inc., we start with the net income and adjust for changes in working capital and non-cash expenses. The calculation is as follows:

• Start with net income: $55,000
• Add back depreciation expense (a non-cash expense): $10,000
• Add the decrease in accounts receivable (an increase in cash): $12,000
• Subtract the decrease in accounts payable (a reduction in cash): -$6,500

Adding these together ($55,000 + $10,000 + $12,000 - $6,500), we get a total cash flow from operating activities of $70,500.

Therefore, the correct answer is C. $70,500.