Question

Assuming Net Income for the year is $230,000, what is the net cash flows from operating activities given the following information: Increase in Salaries Payable: $17,000 Depreciation Expense: $5,000 Increase in Prepaid Rent: $29,000 Loss on sale of asset: $1,150 Increase in Accounts Payable: $31,000 Increase in Inventory: $82,000a. $234,950 b. $242,450 c. $205,450 d. $324,050

Answer 1

$173,150

Step-by-step explanation:

Given that,

Increase in Salaries Payable = $17,000

Depreciation Expense = $5,000

Increase in Prepaid Rent = $29,000

Loss on sale of asset = $1,150

Increase in Accounts Payable = $31,000

Increase in Inventory = $82,000

Net cash flows from operating activities:

= Net income + Increase in Salaries Payable + Depreciation Expense - Increase in Prepaid Rent + Loss on sale of asset + Increase in Accounts Payable - Increase in Inventory

= $230,000 + $17,000 + $5,000 - $29,000 + $1,150 + $31,000 - $82,000

= $173,150

Therefore, the net cash flows from operating activities is $173,150.