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Statement of Cash Flows Cloe's Costumes, Inc
Statement of Cash Flows Cloe's Costumes, Inc. has net cash flows from operating activities for the last year of $244 million. The income statement shows that net income is $150 million and depreciation expense is $85 million. During the year, the change in inventory on the balance sheet was a decrease of $14 million, change in accrued wages and taxes was a decrease of $15 million and change in accounts payable was a decrease of $10 million. At the beginning of the year the balance of accounts receivable was $45 million. What was the end of year balance for accounts receivable?
$20 million
$25 million
$45 million
$65 million
Expert Solution
Computation of Ending Balance of Accounts Receivables:
Net Cash Flow from Operating Activities = Net Income + Depreciation + Decrease in Inventory - Decrease in Accrued wages and taxes + Decrease in Accounts Payable + (Beginning Accounts Receivable - Ending Accounts Receivable)
$244 million = $150 millions + $85 millions + $14 millions - $15 millions - $10 millions + ($45 millions - Ending Accounts Receivable)
$244 million = $224 millions + ($45 millions - Ending Accounts Receivable)
Ending Accounts Receivable = $224 millions + $45 millions - $244 million
Ending Accounts Receivable = $25 millions
So, the correct option is 2nd "$25 millions".
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