Question

Rachel's Recordings reported net income of $250,000. Beginning balances in Accounts Receivable and Accounts Payable were $18,000 and $23,000 respectively. Ending balances in these accounts were $10,500 and $30,000, respectively. Assuming that all relevant information has been presented, Rachel's net cash flows from operating activities would be:

Answer 1

Rachel's net cash flows from operating activities would be $264,500

Step-by-step explanation:

In order to calculate Rachel's net cash flows from operating activities we would have to calculate the following formula:

cash flows from operating activities=Net income+Increase in accounts payable+ decrease in accounts payable

Net income=$250,000

Increase in accounts payable=Ending balance-Beginning Balance

Increase in accounts payable=$30,000-$23,000

Increase in accounts payable=$7,000

decrease in accounts payable=Ending balance-Beginning Balance

decrease in accounts payable=$10,500-$18,000

decrease in accounts payable=$7,500

Therefore, cash flows from operating activities=$250,000+$7,000+$7,500

cash flows from operating activities=$264,500

Rachel's net cash flows from operating activities would be $264,500