Question

The 2020 accounting records of Splish Brothers Inc. reveal these transactions and events. Payment of interest $ 10,400 Collection of accounts receivable $189,500 Cash sales 49,300 Payment of salaries and wages 57,700 Receipt of dividend revenue 17,900 Depreciation expense 15,100 Payment of income taxes 15,000 Proceeds from sale of vehicles 12,300 Net income 38,500 Purchase of equipment for cash 22,500 Payment of accounts payable Loss on sale of vehicles 3,300 for merchandise 115,400 Payment of dividends 14,900 Payment for land 73,400 Payment of operating expenses 28,400 Prepare the cash flows from operating activities section using the direct method

Answer 1

Answer and Explanation:

The Preparation of cash flows from operating activities section using the direct method is shown below:-

                                  Splish Brothers Inc.

               Statement of Cash Flows using Direct method

                           For the Year ended 2020

Particulars                                                                        Amount

Cash Flows from operating activities:

Cash collection from:-  

Customers

($49,300 + $189,500)                       $238,800

Dividend Revenue                            $17,900                  $256,700

Less: Cash payments for

Interest                                              ($10,400)

Income Taxes                                    (15,000)

Salaries and wages                           (57,700)

Operating Expenses                        ($28,400)

Cash payment to

Suppliers for Merchandise               ($115,400)              $226,900

Net Cash provided by operating activities                     $29,800

Since the cash payment reflects the cash outflow so this items would be represented in a negative sign and the cash collections reflects the cash inflow so this item would be represented in a positive sign