Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 14: Q12SE (page 772)

Preparing operating activities using the direct method Amy’s Learning Center has assembled the following data for the year ended June 30, 2018:

Payments to suppliers $ 115,000

Cash payment for purchase of equipment 39,000

Payments to employees 66,000

Payment of notes payable 34,000

Payment of dividends 7,500

Cash receipt from issuance of stock 22,000

Collections from customers 188,000

Cash receipt from sale of land 58,000

Cash balance, June 30, 2017 41,000 Prepare the operating activities section of the business’s statement of cash flows for the year ended June 30, 2018, using the direct method.

Short Answer

Expert verified

Net cash provided by operating activities is $7,000.

Step by step solution

01

Step-by-Step SolutionStep 1: Cash flow from operating activities

Cash flows from operating activities

Receipts:

Collection from customers

$188,000

Payments:

To suppliers

($115,000)

To employees

($66,000)

Net cash provided by operating activities

$7,000

02

Classification of investing and financing activity

Transaction

Activity

Cash payment for purchase of equipment

Investing

Payment of notes payable

Financing

Payment of dividends

Financing

Cash receipt from issuance of stock

Financing

Cash receipt from sale of land

Investing

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Question: Muench, Inc.’s accountant has partially completed the spreadsheet for the statement of cash flows. Fill in the remaining missing information.

Use the Rouse Exercise Equipment data in Exercises E14-23 and E14-24. Rouse plans to purchase a truck for \(23,000 and a forklift for \)125,000 next year. In addition, it plans to pay cash dividends of $3,500. Assuming Rouse plans similar activity for 2019, what would be the amount of free cash flow?

Preparing the direct method statement of cash flows Red Toy Company reported the following comparative balance sheet:

Requirements

1. Compute the collections from customers during 2018 for Red Toy Company. Sales Revenue totaled \(134,000.

2. Compute the payments for inventory during 2018. Cost of Goods Sold was \)79,000.

Question: Describe the five steps used to prepare the statement of cash flows by the indirect method.

Question: If current assets other than cash increase, what is the effect on cash? What about a decrease in current assets other than cash?
See all solutions

Recommended explanations on Business Studies Textbooks

Introduction to Business

Read Explanation

Business Development

Read Explanation

Influences On Business

Read Explanation

Business Operations

Read Explanation

Organizational Behavior

Read Explanation

Human Resources

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free