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: L.L. Company Cash Flow Statement – Direct Method For the year ended December 31 Operating Activities Cash collected from customers $53,500 Cash paid for merchandise ($37,000) Cash paid to other suppliers ($11,450) Cash paid for interest ($2,100) Cash investment income received $634 Cash paid for taxes ($2,284) Net cash provided by operating activities $1,300 Table (1) The table given above depicts various components that help to evaluate the total value of net cash by all the operating activity that is calculated as $1,300. Footnote: The calculation of cash received from customers is given below: Cash Collected from Customers During the Year Particulars Amount ($) Sales $56,000 Less: Increase in Accounts Receivable ($2,500) Cash collected from Customers $53,500 Table (2) The calculation of cash paid for merchandise is given below: Cash Paid for Merchandise Particula...

Intermediate Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (2nd Edition)

2nd Edition

ISBN: 9780134833101

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

See similar textbooks

Concept explainers

Reporting Cash Flows

Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows fro…

Balance Sheet

A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the …

Financial Statements

Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It…

Owner's Capital

Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expect…

Videos

Question

Chapter 22, Problem 22.5BE

To determine

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

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 22, Problem 22.4BE

Chapter 22, Problem 22.6BE

Students have asked these similar questions

General accounting

Please need answer the general accounting question

Financial accounting 1.2.24

Chapter 22 Solutions

Intermediate Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (2nd Edition)

Ch. 22 - Prob. 22.1Q Ch. 22 - Prob. 22.2Q Ch. 22 - Prob. 22.3Q Ch. 22 - Prob. 22.4Q Ch. 22 - Prob. 22.5Q Ch. 22 - How do firms reclassify gains and losses on the...Ch. 22 - Prob. 22.7Q Ch. 22 - Prob. 22.8Q Ch. 22 - Prob. 22.9Q Ch. 22 - Prob. 22.10Q

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:9781285595047
Author:Weil
Publisher:Cengage
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning