Question

The following information is taken from the 2022 general ledger of Orange Company.

Rent

Rent expense $30,000

Prepaid rent, January 1 5,900

Prepaid rent, December 31 7,400

Salaries

Salaries and wages expense $ 54,000

Salaries and wages payable, January 1 2,000

Salaries and wages payable, December 31 8,000

Sales

Sales revenue $160,000

Accounts receivable, January 1 16,000

Accounts receivable, December 31 7,000

Instructions In each case, compute the amount that should be reported in the operating activities section of the statement of cash flows under the direct method. (Show your calculations)

Answer 1

1. Cash payment for rent

Particulars	$
Rent Expense	30,000
Add: Prepaid rent, December 31	7,400
Less: Prepaid rent, January 1	5,900
Cash Payment for Rent	31,500

2. Cash payment for salaries

Particulars	$
Salaries and wages expense	54,000
Add: Salaries and wages, January 1	2,000
Less: Salaries and wages, December 31	8,000
Cash Payment for Salaries	48,000

3. Cash receipts from customers

Particulars	$
Sales revenue	160,000
Add: Accounts receivable, January 1	16,000
Less: Accounts receivable, December 31	7,000
Cash Receipts from customers	169,000

All the best...