Answer:
Cash flow from operating activities
Cash Receipts from Customers 861,000
Cash Paid to Suppliers and Employees (605,000)
Cash Generated from Operations 256,000
Taxation Paid (44,300)
Net Cash from Operating Activities 211,700
Explanation:
Cash flow from operating activities
Cash Receipts from Customers 861,000
Cash Paid to Suppliers and Employees (605,000)
Cash Generated from Operations 256,000
Taxation Paid (44,300)
Net Cash from Operating Activities 211,700
Cash Receipts from Customers
Open a Total Trade Receivables Account and Obtain the Cash Receipts as follows
Debit :
Accounts receivable $56,000
Service revenue $842,000
Totals $898,000
Credit :
Accounts receivable $37,000
Cash (Balancing figure) $861,000
Totals $898,000
Cash Paid to Suppliers and Employees
Operating expenses (excluding depreciation) 626,000
Loss on Sale of equipment (27,000)
Total Relevant Expenses 599,000
Adjust for Working Capital Items :
Increase in Accounts payable (39,000-33,000) 6,000
Cash Paid to Suppliers and Employees 605,000
Taxation Paid
Open a Total Trade Receivables Account and Obtain the Cash Receipts as follows:
Debit :
Cash (Balancing Figure) 44,300
Income taxes payable 4,100
Totals 48,400
Credit :
Income taxes payable 8,400
Income tax expense 40,000
Totals 48,400
