Martinez Corporation had the following 2020 income statement.Sales revenue $213,000Cost of goods sold 119,000Gross profit 94,000Operating expenses (includes depreciation of $19,000) 49,000Net income $45,000The following accounts increased during 2020: Accounts Receivable $10,000, Inventory $10,000, and Accounts Payable $13,000. Prepare the cash flows from operating activities section of Martinez’s 2020 statement of cash flows using the direct method.

Introduction: Statement of cash flows: All cash in and out flows are shown in statement of cash flows. It tells the net available cash balance with the company.Workings: Cash received from sales = Sales value - Increase in accounts receivable = 213000 - 10000 = $ 203000 Cash payments to suppliers = Cost of goods sold + Increase in inventory - Accounts payable increase = 119000 + 10000 - 13000 = 116000 Cash payments for operating expenses = Operating expenses - Depreciation = 49000 - 19000 = $ 30000 Partial Cash flows statement:

Answered: Martinez Corporation had the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Martinez Corporation had the following 2020 income statement.

Sales revenue		$213,000
Cost of goods sold		119,000
Gross profit		94,000
Operating expenses (includes depreciation of $19,000)		49,000
Net income		$45,000

The following accounts increased during 2020: Accounts Receivable $10,000, Inventory $10,000, and Accounts Payable $13,000. Prepare the cash flows from operating activities section of Martinez’s 2020 statement of cash flows using the direct method.

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