Nevada Boot Co.reported net income of $205,000 Beginning and ending Inventory balances were $40,000 and $45,000,respectively.Accounts Payable balances at the beginning and end of the year were $35,000 and $33,000,respectively.Assuming that all relevant information has been presented,Nevada Boot would report operating cash flows of:

Question

Quizplus · Accepted Answer

To calculate the operating cash flows, we need to use the indirect method:

Net income: $205,000
Adjustments for non-cash items:
Add Increase in accounts payable: $2,000 ($35,000 - $33,000)
Less Increase in inventory: $5,000 ($45,000 - $40,000)

Operating cash flows: $202,000 - $5,000 + $2,000 = $198,000

Therefore, the correct answer is B.