Question
I am unsure how to calculate these questions. Where do I start? what formulas do I use? Power Corporation owns 75 percent of Surge Company's
I am unsure how to calculate these questions. Where do I start? what formulas do I use?
Power Corporation owns 75 percent of Surge Company's stock; no intercompany purchases or sales were made in 20X4. For the year, Power and Surge reported sales of $360,000 and $220,000 and cost of goods sold of $160,000 and $104,500, respectively. Power's inventory increased by $20,000, but Surge's decreased by $11,000. Power's accounts receivable increased by $25,000 and its accounts payable decreased by $17,000 during 20X4. Surge's accounts receivable decreased by $11,000 and its accounts payable increased by $5,000.
Required:
Assuming there were no other cash flows from operations, using the direct method of computing cash flows from operating activities, compute the following:
a. Cash received by customers:
b. Cash payments to suppliers:
c. Cash flows from operating activities:
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