Question

Anthony Inc. reported net income of $270,000. Beginning balances in Accounts Receivable and Accounts Payable were $17,000 and $21,000 respectively. Ending balances in these accounts were $10,500 and $29,000, respectively. Using just this information what is Anthony Inc.'s net cash flows from operating activities?

Answer 1

Answer:

$268,500

Explanation:

When you use the indirect method to calculate net cash flows, you start with net income and then adjust it by:

• adding the amount by which accounts receivable decreased = ($17,000 - $10,500) = $6,500
• deducting the amount by which accounts payable increases = ($21,000 - $29,000) = -$8,000

net cash flow from operating activities = $270,000 + $6,500 - $8,000 = $268,500