Chapter 23, Problem 9BE

To determine

Operating activities: The items that are directly linked with the transactions that affect the net income of the company are termed as operating activities.

Direct method: It reports cash receipts and disbursements arising out of operating activities. Difference between these amounts helps us arrive at the net cash flows from operating activities.

Given Information: Income statement for 2017:

Revenues	$100,000
Expenses	60,000
	40,000

Other information as below:

Accounts receivable					Allowance for doubtful debts
January 1, 2017 Revenues	20,000 10,000	1,000 90,000	Write Offs Collection		Write offs	1,000	1,200 1,840	January 1, 2017 Bad debts Expense
December 31, 2017	29,000						2,040	December 31, 2017

• (a)

To determine cash flows using direct method from operations.

To determine

• (b)

To determine cash flows from operating using the indirect method.