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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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In the current year, Harrisburg Corporation collected $100,000 from its customers and paid out $30,000 to suppliers, $20,000 to employees, and $8,000 for income taxes. Using the direct method, prepare the operating activities section of its statement of cash flows based on this information.

To determine

Prepare the operating activities section of statement of cash flow under the direct method.

Explanation

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.

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

Direct method: Under direct method, cash receipts from customers (cash inflows) and cash payments to suppliers (cash outflows) are reported under the operating activities.

Prepare the operating activities section under the direct method.

H Company
Statement of cash flow for operating activities – direct Method

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