Answer and Explanation:
The preparation of the cash flows from operating activities section of the statement of cash flows is presented below:
Cash Flow from Operating Activities under Direct Method
Cash receipts from customers (Note 1) $1,000
(-) Cash payments to merchandise (Note 2) -$311
(-) Cash payment for Salaries expense (Note 3) -$183
(-) Cash paid for interest paid (Note 4) -$35
(-) Income Taxes paid (Note 5) -$141
Net Cash Flow from Operating Activities $330
Working Notes
1. Cash receipts from customers
Beginning Accounts Receivable $289
Plus: Credit Sales made during the year $980
Less: Ending Accounts Receivable -$269
Cash Collected from Customers $1,000
2. Cash payments to merchandise
Beginning Accounts Payable $210
Add: Purchases made during the year $324
Less: Ending Accounts Payable -$223
Cash Paid to Supplier $311
The Purchase made during the year = Cost of Goods Sold + Ending Inventory - Beginning Inventory
= $343 + $469 - $488
= $324
3. Cash paid for salaries expense
Salaries Expense incurred $170
Add: Beginning Balance $124
Less: Ending balance -$111
Cash paid for salaries expense $183
4. Cash paid for Interest
Interest Expense incurred $46
Add: Beginning Balance $58
Less: Ending balance -$69
Cash paid for interest $35
5. Cash paid for Income Taxes
Income tax expense incurred $153
Add: Beginning Balance $48
Less: Ending balance -$60
Cash paid for Income Taxes $141
