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8 July, 03:13

Bird Brain Co. reported net income of $45,000 for the year ended December 31, 2016. January 1 balances in accounts receivable and accounts payable were $23,000 and $26,000 respectively. Year-end balances in these accounts were $22,000 and $28,000, respectively. Assuming that all relevant information has been presented, Bird Brain's cash flows from operating activities would be:

$48,000.

$44,000.

$46,000.

$45,000.

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Answers (1)
  1. 8 July, 06:30
    0
    Option (A) is correct.

    Explanation:

    Cash flow from Operating Activities:

    = Net income + (Beginning Accounts receivable - Ending Accounts receivable) + (Ending Accounts payable - Beginning Accounts payable)

    = $45,000 + ($23,000 - $22,000) + ($28,000 - $26,000)

    = $45,000 + $1,000 + $2,000

    = $48,000

    Therefore, Bird Brain's cash flows from operating activities would be $48,000.
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