Explanation Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities. Direct method: Under direct method, cash receipts from customers ( cash inflows ) and cash payments to suppliers ( cash outflows ) are reported under the operating activities. Operating activities: Operating activities include cash inflows and outflows from business operations. Prepare the operating activities section of Company S’s statement of cash flow using direct method: Company S Statement of Cash Flows (partial)-Direct Method For the Year Ended December 31, 2019 Particulars Amount ($) Amount ($) Cash flows from operating activities: Cash receipts from customers: Collections from customers 1,797,500 Total cash receipts 1,797,500 Less: Cash payments: Payment for inventory (1) (1,028,500) Payment for salaries (2) (249,035) Payment for rent (3) (49,600) Payment for utilities (18,125) Total cash payments (1,345,260) Net cash provided by operating activities $452,240 Table (2) Working notes: Calculate the amount of cash received from customers: Cash receipts from Customers ]

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ISBN: 9781260158601

Author: Wild

Publisher: MCG

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Chapter 16, Problem 18E

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Prepare the operating activities section of Company S’s statement of cash flow using direct method.

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Chapter 16, Problem 17E

Chapter 16, Problem 19E

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Chapter 16 Solutions

Principles of Financial Accounting.

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