Question

Laser World's income statement reported total revenues, $870,000 and total expenses (including $44,000 depreciation) of $755,000. The balance sheet reported the following: Accounts Receivable—beginning balance, $58,000 and ending balance, $60,500; Accounts Payable—beginning balance, $26,500 and ending balance, $32,500. Therefore, based only on this information, the net cash flows from operating activities were:

$162,500.

$155,500.

$118,500.

$150,500.

Answer 1

Answer: The net cash flows from operating activities is $162,500.

Explanation:

Laser World's

Net cash flows from operating activities

Net income ($870,000 - $755,000)                                $115,000

Add back depreciation                                                        44,000

Increase in accounts receivable ($60,500 - 58,000)        (2,500)

Increase in accounts payable ($32,500 - 26,500)             6,000

Net cash flows from operating activities                     $162,500