Using Direct Method to Calculate Cash Flow from Operating Activities
The following condensed information (dollars in thousands) is available from Mary’s Muffins.Assume that all sales are credit sales (accounts receivable) and all purchases are also on credit (accounts payable).
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December 31 |
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Year 1 |
Year 2 |
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Balance Sheet Data: |
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Accounts receivable |
$55 |
$ 53 |
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Prepaid expenses |
13 |
15 |
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Salaries payable |
22 |
25 |
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Taxes payable |
17 |
13 |
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Inventory |
32 |
26 |
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Accounts payable |
27 |
21 |
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Income Statement Data: |
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Sales revenues |
$550 |
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Cost of goods sold |
210 |
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Salaries expense |
112 |
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Tax expense |
57 |
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Depreciation expense |
29 |
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Other expense |
$ 21 |
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Required
Prepare the operating activities section of Year 2’s statement of cash flows,using the direct method.