Lucia Ltd. reported net income of $135,000 for the year ended December 31, 2016. January 1 balances in accounts receivable and accounts payable were $29,000 and $26,000, respectively. Year-end balances in these accounts were $30,000 and $24,000, respectively. Assuming that all relevant information has been presented, Lucia's cash flows from operating activities would be:

$132,000.

$134,000.

$136,000.

$138,000.

Lucia's cash flows from operating activities would be:

$132,000.

Explanation:

Accounts Receivable End: $30,000 Beginning: $29,000 = - $1,000

Accounts Payable End: $24,000 Beginning: $26,000 = - $2,000

Net Income : $ 135,000

To calculate the total cash flow from operating activities it's necessary to deduct of the Net Income the variance of these accounts which indicates a negative variance during the year, - $2,000 on accounts payable because the company paid more bills these year than before, and - $1,000 because the company expand their credit line to customers.

Cash Flow: $135,000 - $1,000 - $2,000 = $132,000.