Question

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.)

1. a Record the service revenue of $170 for cash and $80 on account.

1. b Record the depreciation expense of $100.

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.) -net income: -depreciation: -Increase in accounts receivable -Net cash flow from operating activities

Answer 1

Journal entry :

Date	account & expalantion	debit	credit
	Cash	170
	Account receivable	80
	Service revenue		250
	(To record service revenue)
	Depreciation expense	100
	Accumlated depreciation		100
	(To record derpeciation)

2) Net cash flow from operating activities = 170

3) Net income = 250-100 = 150

4) Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).

Net income	150
Adjustment to reconcile net income
Depreciation	100
Increase account receivable	-80
Net cash flow from operating activities	170