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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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(Appendix 21.1) Operating Cash Flows The following is accounting information taken from Woodrail Company’s adjusted trial balance for 2019:

Chapter 21, Problem 19E, (Appendix 21.1) Operating Cash Flows The following is accounting information taken from Woodrail , example  1

In addition, the following changes occurred in selected accounts during 2019:

Chapter 21, Problem 19E, (Appendix 21.1) Operating Cash Flows The following is accounting information taken from Woodrail , example  2

Required:

Using the direct method, prepare the cash flows from operating activities section of the 2019 statement of cash flows for Woodrail.

To determine

Calculate cash flow from operating activities section in the cash flow statement using direct method.

Explanation

Statement of cash flows: Cash flow statement reports all the cash transactions which are responsible for inflow and outflow of cash. The results of these transactions are 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, company reports its operating cash inflow and then, deducts operating cash outflow to determine its net cash flow from operating activities.

Find out cash flow from operating activities:

ParticularsAmount($)Amount($)Amount($)
Cash inflow:   
Collection from customers:   
Sales revenue75,000  
Add: Decrease in accounts receivable5,70080,700 
Interest collected 4,300 
Cash inflow from operating activities  

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