Question

Bird Brain Co. reported net income of $45,000 for the year ended December 31, 2018. January 1 balances in accounts receivable and accounts payable were $23,000 and $26,000 respectively. Year-end balances in these accounts were $22,000 and $28,000, respectively. Assuming that all relevant information has been presented, Bird Brain's cash flows from operating activities would be:

Answer 1

Answer:

$48,000

Explanation:

Computation for Brain's cash flows from operating activities

CASH FLOW FROM OPERATING ACTIVITIES

Net income$45,000

Add: Decrease in Account receivable $1,000

($23,000-$22,000)

Add: Increase in Account Payable $2,000

($26,000-$28,000)

Cash flows from operating activities $48,000

Therefore Brain's cash flows from operating activities would be: $48,000