Question

Suppose your company sells goods for $330, of which $215 is received in cash and $115 is on account. The goods cost your company $131 and were paid for in a previous period. Your company also recorded salaries and wages of $85, of which only $33 has been paid in cash.

5.

value:
7.69 points

Required information

Required:
1. Prepare the journal entries to record these transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

   

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6.

value:
7.69 points

Required information

2. Calculate the amount that should be reported as net cash flow from operating activities.

    

3. Calculate the amount that should be reported as net income.

    

4. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2). (Amounts to be deducted should be indicated with a minus sign.)

    

References

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Answer 1

1)

Particulars	Debit	Credit
Cash a/c	215
Trade recievables	115
sales a/c		330
salaries and wages	85
salary payable		52
cash		33

2) Cash flow from operating activity will be

= cash sales - cash paid for expenses

= 215 - 33 = 182

3) Net income = sales - cost of goods sold - expense

= 330 - 131 - 85 =114

4)

Particulars	Amount
Net income	114
add - inc in salary payable ( 85-33)	52
less inc in drs	(115)
add - dec in stock	131
Cash flow from op activity	182