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9 March, 08:50

Assuming Net Income for the year is $250,000, what is the cash flows from operating activity given in the following information:

Increase in Salaries Payable $17,500

Depreciation Expense $7,500

Increase in Prepaid Rent $26,500

Loss on sale of asset $1,150

Increase in Accounts Payable $29,000

Increase in Inventory $76,000

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  1. 9 March, 08:54
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    Answer: $202,650

    Explanation:

    Given that,

    Net Income for the year = $250,000

    Increase in Salaries Payable = $17,500

    Depreciation Expense = $7,500

    Increase in Prepaid Rent = $26,500

    Loss on sale of asset = $1,150

    Increase in Accounts Payable = $29,000

    Increase in Inventory = $76,000

    Cash flows from operating activity:

    = Net Income + Salaries Payable + Depreciation Expense - Prepaid Rent + Loss on sale of asset + Accounts Payable - Inventory

    = $250,000 + $17,500 + $7,500 - $26,500 + $1,150 + $29,000 - $76,000

    = $202,650
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