Question

Carr Corporation's comparative balance sheet and income statement for last year appear below:

Comparative Balance Sheet
	Ending Balance			Beginning Balance
Cash and cash equivalents	$	3,150		$	25,300
Accounts receivable		90,500			78,100
Inventory		42,100			48,410
Prepaid expenses		9,270			15,450
Long-term investments		259,200			216,000
Property, plant, and equipment		525,300			504,000
Less accumulated depreciation		326,400			318,600
Total assets	$	603,120		$	568,660
Accounts payable	$	9,900		$	27,250
Accrued liabilities		26,160			18,020
Income taxes payable		52,900			50,600
Bonds payable		164,800			220,000
Common stock		162,000			140,000
Retained earnings		187,360			112,790
Total liabilities and stockholders' equity	$	603,120		$	568,660

Income Statement
Sales	$	926,500
Cost of goods sold		463,500
Gross margin		463,000
Selling and administrative expense		280,800
Net operating income		182,200
Income taxes		41,300
Net income	$	140,900

The company declared and paid $66,330 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year.

Required:

Prepare the operating activities section of the company's statement of cash flows for the year using the direct method. (Enter all amounts as positive values except for adjustments to cash basis that are deducted.)

Answer 1

Cash flows from Operating Activities (Direct Method)
Particulars	Amount
Cash received from customers	$913,600
Cash paid to Suupliers	($474540)
Cash paid for Income taxes	($43600)
Cash flows from Operating Activities	$395460

Notes:

1. Cassh received from Customer = Sales + Begining Balance - Ending Balance

=$926,500 + $78100 - $90500

=$ 913,600

2. Cash paid to Suppliers = Beginning Balance + Purchases - Ending Balance

Purchases = COGS + Ending Inventory - Beginning Inventory3

= $463500 + $42100 - $48810

=$457,190

cash paid = $457190 + $27250 - $9900

=$474,540

3.Income TAxes paid = Income tax Expense + Ending Balance - Beginning Balance

= $41300 + $52900 - $50600

= $43600