Exercise 12-5A (Algo) Use the direct method to determine cash flows from operating activities LO 12-2The following accounts and corresponding balances were drawn from Marinelli Company's Year 2 and Year 1 year-end balance sheets.Year 2Year 1$48,200$39,600Account TitleAccounts receivableInterest receivableOther operating expenses payableSalaries payableThe Year 2 income statement is shown next.Income StatementSalesSalary expense.Other operating expensesOperating incomeNonoperating items: Interest revenueNet income4,80029,90011,850a.Cash inflows from operating activitiesb. Cash outflows from operating activities6,85020,90016,150$760,000.(169,500)(268,500)322,00023,500$345,500Requireda. Use the direct method to compute the amount of cash inflows from operating activities.b. Use the direct method to compute the amount of cash outflows from operating activities.

The cash flow statement is a financial statement which describes the inflow and out flow of cash…

Answered: a. Use the direct method to compute the…

a. Use the direct method to compute the amount of cash inflows from operating activities. b. Use the direct method to compute the amount of cash outflows from operating activities.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Exercise 12-5A (Algo) Use the direct method to determine cash flows from operating activities LO 12-2
The following accounts and corresponding balances were drawn from Marinelli Company's Year 2 and Year 1 year-end balance sheets.
Year 2
Year 1
$48,200
$39,600
Account Title
Accounts receivable
Interest receivable
Other operating expenses payable
Salaries payable
The Year 2 income statement is shown next.
Income Statement
Sales
Salary expense.
Other operating expenses
Operating income
Nonoperating items: Interest revenue
Net income
4,800
29,900
11,850
a.
Cash inflows from operating activities
b. Cash outflows from operating activities
6,850
20,900
16,150
$760,000.
(169,500)
(268,500)
322,000
23,500
$345,500
Required
a. Use the direct method to compute the amount of cash inflows from operating activities.
b. Use the direct method to compute the amount of cash outflows from operating activities.

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