Question

A house painting business had revenues of $16,600 and expenses of $9,600 last summer. There were no depreciation expenses. However, the business reported the following changes in working capital:

Accounts receivable $ 1,800 $ 5,100

Accounts payable 820 360

Calculate net cash flow for the business for this period.

Step 1

Revenues, R = $ 16,600

Expenses, E = $ 9,600

Depreciation expense, D = 0

Increase in accounts receivables = Closing balance - opening balance = $ 5,100 - $ 1,800 = $ 3,300

Increase in accounts payables = Closing balance - opening balance = 360 - 820 = - $ 460

Step 2

Net cash flow for the business for this period = R - E + D - increase in receivables...

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