Suppose your company sells services of $280 in exchange for $160 cash and $120 on account.

Required:

1. Prepare the journal entry to record this transaction (Record the service revenue of $160 for cash and $120 on account.)
2. Identify the amount that should be reported as net cash flow from operating activities.
3. Identify the amount that would be included in net income.
4. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).

(table is for requirement 4)

Net Income Increase in Accounts Receivable Net Cash Flow from Operating Activities