Question

Innovative Products reported net income of $226,000. Beginning and ending inventory balances were $48,000 and $49,000, respectively. Accounts Payable balances at the beginning and end of the year were $39,000 and $34,500, respectively. Assuming that all relevant information has been presented, the company would report net operating cash flows of:

Answer 1

Answer:

The correct answer is $220,500.

Explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the net operating cash flow by using following formula:

Net operating cash flow = Net income - ( Ending - Beginning Inventory) - ( Beginning - ending in AP)

By putting the value, we get

= $226,000 - ( $49,000 - $48,000 ) - ( $39,000 - $34,500)

= $226,000 - $1,000 - $4,500

= $220,500