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.

Question

Business

Sienna Pruitt

30 May, 08:25

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.

+2

Answers (1)

Know the Answer?

Grady Hudson · Answer 1

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.