Balances of the current asset and current liability accounts at the end and begi
ID: 2443436 • Letter: B
Question
Balances of the current asset and current liability accounts at the end and beginning of the year are as follows:End Beginning
Cash
$ 62,000 $73,000
Accounts receivable (net)
75,000 60,000
Inventories
54,000 47,000
Accounts payable
(merchandise creditors)
43,000 37,000
Salaries payable
2,800 3,800
Sales (on account)
210,000
Cost of merchandise sold
70,000
Operating expenses other than depreciation
67,000
Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.
Explanation / Answer
Sales $210,000 Less: cost of goods sold $70,000 Less:operating expenses $67,000 Net operating income $73,000 Net operating income $73,000 Increase in accounts recevable ($15,000) Increase in inventory ($7,000) increase in accounts payable $6,000 Decrease in salaries payable ($1,000) cash flow from operating activities $56,000