Stellar Company’s income statement for the year ended December 31, 2017, contain

Question

Stellar Company’s income statement for the year ended December 31, 2017, contained the following condensed information.

$836,000

$626,000

60,000

26,000

712,000

124,000

40,000

$84,000

Stellar’s balance sheet contained the following comparative data at December 31.

2017

2016

(Accounts payable pertains to operating expenses.)

Prepare the operating activities section of the statement of cash flows using the direct method.

Service revenue

$836,000

Operating expenses (excluding depreciation)

$626,000

Depreciation expense

60,000

Loss on sale of equipment

26,000

712,000

Income before income taxes

124,000

Income tax expense

40,000

Net income

$84,000

Explanation / Answer

Prepare the operating activities section of the statement of cash flows using the direct method.

Cash flow from operating activities Cash received from customer 851000 Cash paid for operating expense -615000 Cash paid for income tax -44300 Net cash flow from operating activities 191700

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