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1 September, 11:52

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?

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  1. 1 September, 12:54
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    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
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