The cash flows are as follows:

It is easier to obtain the change in A/R first: You know that net income minus the change in A/R must add up to cash flows (change in A/R = net income − cash flows). And, knowing the change in A/R, calculating accounts receivable requires simple addition.

Transcribed Image Text:

Quarter 1 2 3 4 10 5 6 7 Reported Net Income $100 $200 $300 $200 $100 $0 $0 Immediate Cash Flows + Delayed Cash Flows $50 $100 $150 $100 $50 $0 $0 +$50 +$100 +$150 +$100 +$50 = Cash Flows =$50 $100 $200 $200 =$200 =$100 =$50 Change in A/R $50 $100 $100 $0 -$100 -$100 -$50 Accounts Receivable $50 $150 $250 $250 $150 $50 $0