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Using the information below, calculate net cash flows from operating activities: Net income $120,000Receive cash from issuing stock 80,000Pay cash for equipment 90,000Increase in accounts receivable 10,000Depreciation expense 30,000Increase in accounts payable 5,000Receive cash from sale of land 75,000Pay cash dividends 20,000Multiple Choice$155,000.$190,000.$145,000.$115,000.

Question

Using the information below, calculate net cash flows from operating activities: Net income 120,000Receivecashfromissuingstock80,000Paycashforequipment90,000Increaseinaccountsreceivable10,000Depreciationexpense30,000Increaseinaccountspayable5,000Receivecashfromsaleofland75,000Paycashdividends20,000MultipleChoice120,000Receive cash from issuing stock 80,000Pay cash for equipment 90,000Increase in accounts receivable 10,000Depreciation expense 30,000Increase in accounts payable 5,000Receive cash from sale of land 75,000Pay cash dividends 20,000Multiple Choice155,000.190,000.190,000.145,000.$115,000.

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Solution

To calculate the net cash flows from operating activities, we start with the net income and then adjust for non-cash expenses and changes in working capital.

Here's how:

  1. Start with the net income: $120,000
  2. Add back depreciation expense (since it's a non-cash expense): 120,000+120,000 + 30,000 = $150,000
  3. Adjust for changes in working capital. An increase in accounts receivable is a use of cash, so subtract it: 150,000−150,000 - 10,000 = $140,000
  4. An increase in accounts payable is a source of cash, so add it: 140,000+140,000 + 5,000 = $145,000

So, the net cash flows from operating activities is 145,000.Therefore,thecorrectansweris145,000. Therefore, the correct answer is 145,000.

This problem has been solved

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