QUESTION 3 Partially correct Mark 1.00 out of 20.00 P Flag question Operating Ca
ID: 2341463 • Letter: Q
Question
QUESTION 3 Partially correct Mark 1.00 out of 20.00 P Flag question Operating Cash Flows (Direct Method) Lincoln Company owns no plant assets and reported the following income statement for the current year: Sales Cost of goods sold Wages expense Rent expense $700,000 $425,000 110,000 38,000 15,000 Insurance expense 588,000 Net income $112,000 Additional balance sheet information about the company follows Accounts receivable Inventory Prepaid insurance Accounts payable Wages payable End of Year $56,000 60,000 7,000 22,000 11,000 Beginning of Year $48,000 66,000 5,000 18,000 15,000 Calculate the net cash flow from operating activities using the direct method. Show a related cash flow for each revenue and expense. Use negative signs in answers below to show a decrease in cash.Explanation / Answer
Lincoln Company
Cash flow Statement (partial)
Operating Activities
Cash collected from customers
$ 692,000.00
Less: Cash Payments for
Cash paid for Merchandise Purchase
$ 415,000.00
Cash paid to employees
$ 114,000.00
Cash paid for Rent
$ 38,000.00
Cash paid for Insurance
$ 17,000.00
$ 584,000.00
Net Cash provided by Operating Activities
$ 108,000.00
Cash collected from customers
sales
$ 700,000.00
Less: Increase in Accounts receivable
$ -8,000.00
Cash collected from customers
$ 692,000.00
Amount paid to Merchandise Purchase
Cost of goods sold
$ 425,000.00
Less- Decrease in Inventory
$ -6,000.00
Net Purchases
$ 419,000.00
Less- Increase in accounts Payable
$ -4,000.00
Amount paid to Merchandise Purchase
$ 415,000.00
Cash paid to employees
Wages Expense
$ 110,000.00
ADD-Decrease in Wages payable
$ 4,000.00
Cash paid to employees
$ 114,000.00
Cash paid for Insurance
Insurance expense
$ 15,000.00
ADD-Increase in Prepaid Insurance
$ 2,000.00
Cash paid for Insurance
$ 17,000.00
Lincoln Company
Cash flow Statement (partial)
Operating Activities
Cash collected from customers
$ 692,000.00
Less: Cash Payments for
Cash paid for Merchandise Purchase
$ 415,000.00
Cash paid to employees
$ 114,000.00
Cash paid for Rent
$ 38,000.00
Cash paid for Insurance
$ 17,000.00
$ 584,000.00
Net Cash provided by Operating Activities
$ 108,000.00
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