Question

GameStop reported net income of $192,400. The beginning balance and ending balance in A/R were $19,500 and 21,950, respectively. Accounts Payable started with $10,030 and ended with $23,110. There was $7,025 in depreciation and a gain of $9,472 from the sale of equipment. Assuming that all relevant information has been presented, GameStop’s net cash flows from operating activities would be:

Answer 1

To calculate the net cash flows from operating activities, we need to consider the changes in accounts receivable (A/R) and accounts payable (A/P).

Net cash flows from operating activities can be calculated using the formula:
Net Cash Flows from Operating Activities = Net Income + Depreciation - Gain from the Sale of Equipment + Increase in A/R - Increase in A/P

Given information:
Net Income = $192,400
Depreciation = $7,025
Gain from the Sale of Equipment = $9,472
Beginning A/R = $19,500
Ending A/R = $21,950
Beginning A/P = $10,030
Ending A/P = $23,110

Increase in A/R = Ending A/R - Beginning A/R = $21,950 - $19,500 = $2,450
Increase in A/P = Ending A/P - Beginning A/P = $23,110 - $10,030 = $13,080

Net Cash Flows from Operating Activities = $192,400 + $7,025 - $9,472 + $2,450 - $13,080
= $186,323

Therefore, GameStop's net cash flows from operating activities would be $186,323.