Answer:
<u>Statement of cash flows for the year ended 2018</u>
Cash flow from Operating Activities
Cash Receipts from Customers $ 380,000
Cash Paid to Suppliers and Employees ($250,000)
Cash Generated from Operations $130,000
Interest on note payable ($5,000)
Net Cash from Operating Activities $125,000
Cash flow from Investing Activities
Interest on note receivable $ 6,000
Principal on note receivable $ 50,000
Sale of investments $ 30,000
Purchase of equipment ($85,000)
Net Cash from Investing Activities $1,000
Cash flow from Financing Activities
Proceeds from note payable $100,000
Principal on note payable ($25,000)
Dividends Paid ($20,000)
Net Cash from Financing Activities $55,000
Movement in Cash and Cash Equivalents $151,000
Beginning Cash and Cash Equivalents $17,000
Ending Cash and Cash Equivalents $168,000
Explanation:
The Direct Method Include <u>only</u> the <em>Cash receipts from customers</em> and <em>Cash payments to suppliers and employees</em> in the calculation of cash generated from operations under the Cash flow from Operating Activity Section of the Statement.
<u>Calculation of Cash Paid to Suppliers and Employees</u>
Purchase of inventory $160,000
Salaries to employees $90,000
Cash Paid to Suppliers and Employees $250,000
