Problem 14-20B. Using transaction data to prepare a statement of cash flows- Direct method The Electric Company engaged in the following transactions during 2017. The beginning cash balance was $43,000 and the ending cash balance was $48,600. 1. Sales on account were $274.000. The beginning receivables balance was $86,000 and the ending, balance was $74.000. 2. Salaries expense was $115,000. The beginning salaries payable balance was $9,600 and the ending balance was $7,500. 3. Other operating expenses were $118,000. The beginning Other Operating Expenses Payable balance was $8.500 and the ending balance was $6,000 4. Recorded $25,000 of depreciation expense. The beginning and ending balances in the Accumu- lated Depreciation account were $18,000 and $43.000, respectively. 5. The Equipment account had beginning and ending balances of $28,000 and $42,000, respectively. There were no sales of equipment during the period. 6. The beginning and ending balances in the Notes Payable account were $38,000 and $32,000, respectively. There were no notes payable issued during the period. 7. There was $4,600 of interest expense reported on the income statement. The beginning and ending balances in the Interest Payable account were $6,400 and $6,200, respectively. 8. The beginning and ending Merchandise Inventory account balances were $26,000 and $32,500, respectively. The company sold merchandise with a cost of $119,000. The beginning and ending balances in the Accounts Payable account were $10,000 and $12,500, respectively. 9. The beginning and ending balances in the Notes Receivable account were $80,000 and $20,000, respectively. Notes receivable result from long-term loans made to creditors. There were no loans made to creditors during the period. 10. The beginning and ending balances in the Common Stock account were $140,000 and $190,000, respectively. The increase was caused by the issue of common stock for cash. 11. Land had beginning and ending balances of $48,000 and $28,000, respectively. Land that cost $20,000 was sold for $16,000, resulting in a loss of $4.000. 12. The tax expense for the period was $6,600. The Tax Payable account had a $3,200 beginning balance and a $2,800 ending balance. 13. The Investments account had beginning and ending balances of $10,000 and $30,000, respec- tively. The company purchased investments for $40.000 cash during the period, and investments that cost $20,000 were sold for $20,000, resulting in a $6.000 gain. Required a. Determine the amount of cash flow for each item and indicate whether the item should appear in the operating, investing, or financing activities section of a statement of cash flows. Also identify any items that do not affect the cash flow statement. Assume The Electric Company uses the di- rect method for showing net cash flow from operating activities b. Prepare a statement of cash flows based on the information you developed in Requirement a
