Fallon Corporation reports net income of $370,000. Accounts Receivable balances at the beginning and end of the year were $40,000 and $48,000, respectively. Beginning and ending Inventory balances were $60,000 and $54,000, respectively. What is the company’s cash inflows from operating activities?

Question

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DeniceSandidge DeniceSandidge · Answer 1 · 2019-12-03T10:51:45+01:00

Answer:

Cash flow from operating activity = $368,000

Explanation:

given data

net income = $370,000

beginning balances = $40,000

end of the year balances = $48,000

Beginning Inventory balances = $60,000

ending Inventory balances = $54,000

to find out

What is the cash inflows from operating activities

solution

we know that cash which is being used or received by the working of any company is the cash flow by the operating activity

so here Cash flow from operating activity will be

Cash flow from operating activity = Net Income + Decrease in Inventory + Increase in Accounts Receivables ....................1

here

Decrease in Inventory is = $ 60000 - $54000 = $6000

and Increase in Accounts Receivables is = $40000 - $48000 = -$8000

so from equation 1

Cash flow from operating activity = $370,000 + $6000 -$8000

Cash flow from operating activity = $368,000