Question

An income statement for Hamilton Corporation follows: Revenues from sales of products $ 360,000 Cost of...

An income statement for Hamilton Corporation follows:

Revenues from sales of products $ 360,000

Cost of goods sold:

Beginning inventory $ 48,000

Purchases 228,000

Ending inventory (168,000 ) (108,000 )

Depreciation expense (54,000 )

Gain on retirement of bond s 60,000

Salary expense (42,000 )

Insurance expense (6,000 )

Income tax expense (36,000 )

Net income $ 174,000

Additional Information:

Decrease in accounts receivable, $36,000.

The prepaid insurance account increased by $4,800 during the year.

Included in salary expenses are salaries of $9,600 accrued at the end of the year; no salaries were unpaid at the beginning of the year.

The bonds payable had a book value of $240,000 at the date of retirement.

Increase in accounts payable, $21,000.

Required:

Prepare a schedule showing the net cash flows generated by the operating activities of Hamilton Corporation. Use the direct method.

Business   Accounting   
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Answer #1
Cash flows from operating activities
Cash collection from customers $   396,000 360000+36000
Cash payments
Cash paid for merchandise inventory $ (207,000) 228000-21000
Cash paid for salary expense $   (32,400) 42000-9600
Cash paid for insurance expense $   (10,800) 6000+4800
Cash paid for income tax expense $   (36,000)
$ (286,200)
Net cash provided by operating activities $   109,800

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