Question

The income statement of Oriole Company is shown below. ORIOLE COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue $6,840,000 Cost of goods sold Beginning inventory $1,920,000 Purchases 4,390,000 Goods available for sale 6,310,000 Ending inventory 1,580,000 Cost of goods sold 4,730,000 Gross profit 2,110,000 Operating expenses Selling expenses 460,000 Administrative expenses 710,000 1,170,000 Net income $940,000
Prepare the operating activities section of the statement of the cash flows using the direct method.

Answer 1

Answer:

Cash flow from operating activities

Cash Receipts from Customers                            6,840,000

Cash Paid to Suppliers and Employees              (5,900,000)

Net Cash from Operating Activities                        940,000

Explanation:

Cash Receipts from Customers Workings

Total Debtors T - Account

Debit :

Sales                                                            6,840,000

Totals                                                          6,840,000

Credit:

Cash Receipts                                            6,840,000

Totals                                                         6,840,000

Cash Paid to Suppliers and Employees

Cost of goods sold                                      4,730,000

Add Other Expenses  

Selling expenses                                            460,000

Administrative expenses                                710,000

Cash Paid to Suppliers and Employees    5,900,000