
Concept explainers
Cash flow statement is that statement in which, transaction related to cash are recorded. It is mandatory report and included in the financial statement of the company. It is divided into three parts operating activities, investing activity, and financial activity
Operating Activity:
Operating activity is the first part of the cash flow statement. The main focuses of the operating activity on the
To prepare: Cash flow from operating activities by direct method.

Explanation of Solution
Prepare section related to operating activities of statement of cash flows:
L Company | |
Statement of Cash Flows | |
For the Year Ended 31 December, 2017 | |
Cash flow from operating activities (direct method) | Amount ($) |
Cash receipts form customer | 97,400 |
Cash paid for rent | (9,040) |
Cash paid for salaries | (17,820) |
Cash paid for insurance | (3,780) |
Cash paid for interest | (3,600) |
Cash paid for utilities | (2,740) |
Cash paid for inventory | (42,640 ) |
Net cash flow from operating activities | 17,780 |
Hence, $17,800 is the net cash flow from operating activities.
Working Note:
Computation of cash received from customer,
Cash receipt from customer is $97,400.
Computation of the cash paid for rent,
Cash paid for rent is $9,040.
Computation of the salaries payable,
Cash paid for the salaries is $17,820.
Computation of cash paid for insurance,
Cash paid for insurance is $3,780.
Computation of cash paid for utilities,
Cash paid for utilities is $2,740.
Computation of cash paid to acquire inventory,
Want to see more full solutions like this?
Chapter 12 Solutions
Financial and Managerial Accounting
- What is the gain or loss she will recognise on the salearrow_forwardI am searching for the accurate solution to this general accounting problem with the right approach.arrow_forwardCatalyst Enterprises uses the cash basis of accounting. During the year, Catalyst Enterprises made $845,000 in payments to its suppliers. The company's beginning inventory was $65,000, and its ending inventory was $95,000. Additionally, Catalyst had a beginning accounts payable of $110,000 and an ending accounts payable of $140,000. What is Catalyst Enterprises' Cost of Goods Sold (COGS) under the accrual basis of accounting?arrow_forward
- Can you explain the correct methodology to solve this general accounting problem?arrow_forwardPrimetime Distributors' credit sales are $560,000, with returns $35,000 and cash collections $490,000. Their beginning accounts receivable was $95,000. Calculate the ending accounts receivable balance at December 31, 2024.arrow_forwardPlease provide the solution to this general accounting question with accurate financial calculations.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





