Teal Company’s income statement for the year ended December 31, 2017, contained

Question

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

$845,000

$620,000

61,000

26,000

707,000

138,000

41,000

$97,000

Teal’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

$845,000

Operating expenses (excluding depreciation)

$620,000

Depreciation expense

61,000

Loss on sale of equipment

26,000

707,000

Income before income taxes

138,000

Income tax expense

41,000

Net income

$97,000

Explanation / Answer

Solution:

Computation of Cash collection from customers Particulars Amount Beginning accounts receivables $56,000.00 Add: Service Revenue for the period $845,000.00 Less: Ending accounts receivables $39,000.00 Cash received from customer $862,000.00

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