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Suppose your company sells services of $270 in exchange for $155 cash and $115 on account. Required:Prepare the journal entry to record this transaction.Identify the amount that should be reported as net cash flow from operating activities.Identify the amount that would be included in net income.Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2). I have no clue how to work this problem

Question

Suppose your company sells services of $270 in exchange for $155 cash and $115 on account. 


Required:

  1. Prepare the journal entry to record this transaction.
  2. Identify the amount that should be reported as net cash flow from operating activities.
  3. Identify the amount that would be included in net income.
  4. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).

 

I have no clue how to work this problem

check_circleAnswer
Step 1

Operating activities: Operating activities include cash inflows and outflows from business operations.

 

Net income: The bottom line of income statement which is the result of excess of earnings from operations (revenues) over the costs incurred for earning revenues (expenses) is referred to as net income.

Step 2

Prepare the journal entry to record this transaction.

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Step 3

Identify the amount that should be reported as net cash flow from operating acti...

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Cash Flow Statements

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