Castile Inc. had a beginning balance of $4,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $4,500. During the period, Castile recognized $68,000 of revenue on account. Castile's Salaries Payable account has a beginning balance of $2,600 and an ending balance of $1,500. During the period, the company recognized $46,000 of accrued salary expense.

Based on the information provided, determine the amount of net cash flow from operating activities.

Question

Business

Kendall Poole

14 July, 03:47

Castile Inc. had a beginning balance of $4,000 in its Accounts Receivable account. The ending balance of Accounts Receivable was $4,500. During the period, Castile recognized $68,000 of revenue on account. Castile's Salaries Payable account has a beginning balance of $2,600 and an ending balance of $1,500. During the period, the company recognized $46,000 of accrued salary expense.

Based on the information provided, determine the amount of net cash flow from operating activities.

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Answers (1)

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Jaylon Goodman · Answer 1

Net cash flow from operating activities is $20,400.

Explanation:

Operating Cash flow are the cash flows related to the operations of the business only. All the cash flows associated with revenues and expenses activities are operating cash flows.

According to given information:

Net Income = Revenue - Expense = $68,000 - $46,000 = $22,000

Cash Flow from account receivables = Beginning balance + revenue for the year - ending balance = $4,000 + $68,000 - $4,500 = $67,500

Cash Flow from Salaries payable account = Beginning balance + accrued Salaries for the year - ending balance = $2,600 + $46,000 - $1,500 = $47,100

Cash Flow from operating activities:

Cash Received fro Account Receivables $67,500

Cash paid for salary expense ($47,100)

Net Cash flow from operating activities $20,400