Question

In: Accounting

The two independent cases are listed below: Case A Case B Year 2 Year 1 Year...

The two independent cases are listed below:

Case A

Case B

Year 2 Year 1 Year 2 Year 1
  Sales Revenue $ 11,200 $ 9,200 $ 22,000 $ 18,200
  Cost of Goods Sold 6,100 5,600 12,400 11,100
  Gross Profit 5,100 3,600 9,600 7,100
  Depreciation Expense 1,020 1,020 1,520 1,520
  Salaries and Wages Expense 2,600 2,020 5,200 5,020
  Net Income 1,480 560 2,880 560
  Accounts Receivable 310 410 760 610
  Inventory 760 510 750 810
  Accounts Payable 820 720 810 870
  Salaries and Wages Payable 1,200 1,220 210 260

Compute the net cash flow from operating activities section of the Year 2 statement of cash flows using the direct method. (Amounts to be deducted should be indicated with a minus sign.)

Solutions

Expert Solution

Case A

Cash Flow Statement
Direct Method
Cash flow from Operating Activities
Cash Collected from customers $               11,300 =11200+410-310
Total Cash Inflows $           11,300
Cash paid to Suppliers $                -6,250 =-(6100+720-820+760-510)
Cash paid for Salaries $                -2,620 =-(2600+1220-1200)
Total Cash Outflows $           -8,870
Cash from operating activities $             2,430

Case B

Cash Flow Statement
Direct Method
Cash flow from Operating Activities
Cash Collected from customers $               21,850 =22000+610-760
Total Cash Inflows $           21,850
Cash paid to Suppliers $              -12,400 =-(12400+870-810+750-810)
Cash paid for Salaries $                -5,250 =-(5200+260-210)
Total Cash Outflows $         -17,650
Cash from operating activities $             4,200

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