Question

The independent cases are listed below that includes all items relevant to operating activities: Case A Case B Case C Sales revenue $ 70,000 $ 60,000 $ 101,000 Cost of goods sold 37,500 28,500 67,500 Depreciation expense 10,500 2,500 26,500 Salaries and wages expense 5,500 13,500 8,500 Net income (loss) 16,500 15,500 (1,500 ) Accounts receivable increase (decrease) (1,200 ) 4,500 3,500 Inventory increase (decrease) 2,500 0 (3,500 ) Accounts payable increase (decrease) 0 3,000 (1,200 ) Salaries and wages payable increase (decrease) 1,750 (2,500 ) 1,200 Compute cash flows from operating activities using the direct method. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Answer:

Cash flow :

For Case A = $27,450

Case B = $14,000

Case C = $25,000

Explanation:

As per the data given in the question,

                                                                Case A          Case B         Case C

Cash collected from customers            $712,000      $555,000     $97,500

Cash payment to suppliers                  -$40,000      -$25,500      -$65,200

Cash payment for operating expense -$3,750        -$16,000       -$7,300

Net cash provided by operating activities $27,450 $14,000         $25,000

Where,

Cash received from customers = Net sales + dec. in account receivable - inc. in accounts receivable

Cash paid to suppliers = COG sold + inc. in inventory + dec. in accounts payable - dec. in inventory - inc. in accounts payable

Cash paid for operating expense = operating expense - Depreciation + inc. in prepaid expense + dec. in accrued expenses payable - inc. in accounts payable - inc. in accrued expenses payable