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Operating Cash Flows (Direct Method) The Washington Company owns no plant assets and had the following income statement for the year: Sales revenue $900,000 Cost

Operating Cash Flows (Direct Method)

The Washington Company owns no plant assets and had the following income statement for the year:

Sales revenue $900,000
Cost of goods sold $470,000
Wages expense 120,000
Rent expense 50,000
Insurance expense 15,000 655,000
Net income $245,000

Additional information about the company includes:

End of Year Beginning of Year
Accounts receivable $54,000 $51,000
Inventory 60,000 76,000
Prepaid insurance 8,000 7,000
Accounts payable 24,000 18,000
Wages payable 7,000 11,000

Calculate the cash flow from operating activities using the direct method. Show a related cash flow for each revenue and expense.

Hint: Remember to enter cash outflow answers (transactions that reduce cash) and expenses (COGS and wages) as negative numbers.

Sales Revenue
Accounts Receivable Increase
Cash Received from Customers
Cost of Goods Sold
Inventory Decrease
Accounts Payable Increase
Cash Paid for Merchandise Purchased
Wages Expense
Wages Payable Decrease
Cash Paid to Employees
Insurance Expense
Prepaid Insurance Increase
Cash Paid for Insurance
Cash Flow from Operating Activities
Cash Received from Customers
Cash Paid for Merchandise Purchased
Cash Paid to Employees
Cash Paid for Rent
Cash Paid for Insurance
Cash Provided by Operating Activities

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