Explanation Operating Activities Section: The activities which accounts for daily operating transactions results in cash inflows as well as outflows are referred to as the operating activities section. The cash flows in the operating activities exists mainly from the production and distribution of commodities produced in an economy. The cash flow statement as per the direct method is given below: R Shops, Incorporated Cash Flow Statement – Direct Method For the year ended December 31 Operating Activities: Amount ($) Cash collected from customers 79,585 Less: Cash paid for Merchandise (42,851) Less: Cash paid to other suppliers (5,520) Less: Cash paid for interest (4,000) Cash investment income received 3,400 Less: Cash paid for taxes 6,184 Net Cash Provided by Operating Activities 24,430 Table (1) The table given above depicts various components that help to evaluate the net cash from the operating activities that is $24,430. Working Notes: The calculation of cash collected from customers in a given year is shown below: Cash Collected from Customers During the Year Particulars Amount ($) Sales 80,085 Less: Increase in Accounts Receivable (500) Cash collected from Customers 79,585 Table (2) The calculation of cash paid for merchandise is given below: Cash Paid for Merchandise Particulars Amount ($) Cost of Goods Sold 48,051 Less: Decrease in Inventory (1,700) Purchas...

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ISBN: 9780136946601

Author: GORDON

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Chapter 22, Problem 22.10BE

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To prepare: The operating activities section of the cash flow statement using the direct method.

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Chapter 22, Problem 22.9BE

Chapter 22, Problem 22.11BE

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During the year, Kiner Company made an entry to write off a $9,000 uncollectible account. Before this entry was made, the balance in accounts receivable was $315,000 and the balance in the allowance account was $27,000. The net realizable value of accounts receivable after the write-off entry was: A. $200,000. B. $184,000. C. $176,000. D. $288,000.

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