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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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