Question

6) Computation of operating cash flows The financial statements of Packard Corporation provide the following information for the current year: End of Beginning of Year Year $106,000 $105,000 $31,000 $74,000 Accounts receivable $98,000 Inventory Prepaid expenses Accounts payable (for merchandise) Accrued liabilities $120,000 $29,000 $70,000 $30,000 $28,000 Net sales $848,000 Cost of goods sold Expenses (including depreciation of $43,000) $318,000 $258,000 Using this information, compute for the current year: (show your work for partial credit) $ Cash received from customers а. b. $ Cash payments for purchases of merchandise Cash payments for operating expenses $ с. d. Net Cash flow from operating activities

Answer 1

a. Cash received from customers $ 840,000 b. Cash payments for purchase of merchandise $ 299,000 c. Cash payments for operating expenses S 213,000 d. Net Cash flow from operating activities $ 328,000 Working Notes Cash received from customers Opening balance of Accounts Receivables Add: Sales S $ S S S 98.000 848.000 946,000 106.000 840.000 Less: Closing balance of accounts receivables

Cash paymemts for purchase of merchandise Cost of Goods sold Add: Opening Balance of Accounts payable Closing Balance of Inventory $ $ $ $ $ $ S 318,000 70,000 105,000 493,000 74.000 120,000 299,000 Less: Closing balance of accounts payable opening balance of inventory $ 28,000 Cash payments for operating expenses Accured Liabilities opening Balance Add: Operating Expensse excluding bad debts and depreciation ($258,000-$43,000) S $ $ S 215,000 243,000 30,000 213.000 Less: Accured Liabilities Closing Balance Net Cash flow from operating activities (5840,000-$299,000-$213,000) S 328,000