Question

A consolidated income statement and selected comparative consolidated balance sheet data for Palano Company and subsidiary follow:

Palano Company and Subsidiary Consolidated Income Statement for the Year Ended December 31, 2015
Sales				$701,000
Cost of sales				263,000
Gross profit				438,000
Operating expenses:
Depreciation expense		$76,000
Selling expenses		122,000
Administrative expenses		85,000		283,000
Consolidated net income				155,000
Less noncontrolling interest in consolidated net income				38,750
Controlling interest in consolidated net income				$116,250

		December 31
		2014		2015
Accounts receivable		$229,000		$318,000
Inventory		194,000		234,000
Prepaid selling expenses		26,000		30,000
Accounts payable		99,000		79,000
Accrued selling expenses		96,000		84,000
Accrued administrative expenses		56,000		39,000

1- Prepare the cash flow from operating activities section of a consolidated statement of cash flows assuming use of the Direct method.

Answer 1

Statement of cash flow
For the Year Ended December 31, 2015
Cash flows from operating activities
Cash receipt from customers	$612,000
Cash payment
To suppliers	(323,000.00)
For selling expenses	-138000
For administrative expenses	-102000
Net cash from operating activities	49,000.00
working
Cash receipt from customer
Sales revenue	$701,000
Less: increase in Accounts recievable	-89000
Cash receipt from customer	$612,000
Cash payment
Cost of sales	263000
Add:Incresae in inventories	40000
Add: Decrease in Accounts payable	20000
To supplier	323000
For administrative expenses
Administrative expenses	85000
Add: decraese in accured adm expenses	17000
	102000
For selling expenses
Selling expenses	122000
Add: decraese in accured selling expenses	12000
Add: Increase in prepaid selling expenses	4000
	138000
If any doubt please comment