Question 3 (7 marks)

The income statement of Price Ltd for the year ended 31 December 2020, reported the following condensed information:

Revenue from fees $600,000

Operating expenses 360,000

Income from operations 240,000

Income tax expense 60,000

Net income $180,000

Price's balance sheet contained the following comparative data at December 31:

2020 2019

Accounts receivable $50,000 $45,000

Accounts payable 35,000 41,000

Income taxes payable 6,000 3,000

Price has no depreciable assets. Accounts payable pertains to operating expenses.

Required:

(a) Calculate:

1. Cash receipts from customers. (1 mark)
2. Cash payments for operating expenses. (1 mark)

(b) Prepare the operating activities section of the statement of cash flows for 2020. (5 marks)