Question

# Sheridan Ltd. reported the following for the fiscal year 2021: SHERIDAN LTD. Income Statement Year Ended...

Sheridan Ltd. reported the following for the fiscal year 2021: SHERIDAN LTD. Income Statement Year Ended September 30, 2021 Sales \$566,000 Cost of goods sold 321,000 Gross profit 245,000 Operating expenses \$ 92,000 Depreciation expense 17,000 Gain on sale of land (27,000 ) 82,000 Profit before income tax 163,000 Income tax expense 40,750 Profit \$122,250 Additional information:

1. Accounts receivable decreased by \$14,600 during the year. 2. Inventory increased by \$6,100 during the year. 3. Prepaid expenses decreased by \$4,100 during the year. 4. Accounts payable to suppliers increased by \$9,600 during the year. 5. Accrued expenses payable increased by \$3,600 during the year. 6. Income tax payable decreased by \$5,400 during the year.

Prepare the operating activities section of the cash flow statement using the direct method

#### Homework Answers

Answer #1
 Operating Activities : Cash received from Customers \$580,600 Cash paid to supplier \$317,500 Cash paid for Operating Expense \$84,300 Cash paid for Income Tax \$46,150 Cash inflow from Operating Activities \$132,650

Explanations :-

 Cash received from Customers Sales \$566,000 Add: Account Receivable Decrease \$14,600 \$580,600 Cash paid to supplier Cost of Goods sold \$321,000 Add: Inventory Increased \$6,100 Less: Increase Account Payable \$9,600 \$317,500 Cash paid for Operating Expense Operating Expense \$92,000 Less: Prepaid Expense Decrease \$4,100 Less: Accrued Expense Increase \$3,600 \$84,300 Cash paid for Income Tax Income tax expense \$40,750 Add: Income Tax Payable Decrease \$5,400 \$46,150
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