Question

Problem 17-04A (Video)

The income statement of Whitlock Company is presented here.

WHITLOCK COMPANY Income Statement For the Year Ended November 30, 2020
Sales revenue				$7,425,000
Cost of goods sold
Beginning inventory		$1,833,800
Purchases		4,408,000
Goods available for sale		6,241,800
Ending inventory		1,381,900
Total cost of goods sold				4,859,900
Gross profit				2,565,100
Operating expenses				1,006,500
Net income				$1,558,600

Additional information:

1.		Accounts receivable increased $205,000 during the year, and inventory decreased $451,900.
2.		Prepaid expenses increased $177,600 during the year.
3.		Accounts payable to suppliers of merchandise decreased $331,100 during the year.
4.		Accrued expenses payable decreased $103,500 during the year.
5.		Operating expenses include depreciation expense of $84,700.

Prepare the operating activities section of the statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

WHITLOCK COMPANY Partial Statement of Cash Flows For the Year Ended November 30, 2020November 30, 2020For the Month Ended November 30, 2020
Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
For Salaries and Wages    To Suppliers    For Income Taxes    For Operating Expenses    Cash Receipts from Dividend Revenue    Cash Receipts from Customers		$
AddLess cash payments:
For Salaries and Wages    For Income Taxes    To Suppliers    Cash Receipts from Customers    Cash Receipts from Dividend Revenue    For Operating Expenses	$
To Suppliers    For Income Taxes    For Operating Expenses    Cash Receipts from Dividend Revenue    For Salaries and Wages    Cash Receipts from Customers
Cash at Beginning of Period    Cash at End of Period    Cash Flows from Financing Activities    Cash Flows from Investing Activities    Cash Flows from Operating Activities    Net Cash Provided by Financing Activities    Net Cash Provided by Investing Activities    Net Cash Provided by Operating Activities    Net Cash Used by Financing Activities    Net Cash Used by Investing Activities    Net Cash Used by Operating Activities    Net Decrease in Cash    Net Increase in Cash		$

Answer 1

Cash Flow from Operating Activities	Amount ($)
Cash Received from Customers	7220000
Less: Cash paid for
Merchandise Inventory	-4739100
Operating Expenses	-1202900
Cash Generated from Operations	1278000

Note 1: Cash Received from customers

Sales	7425000
Less:
Accounts Receivable Increased	-205000
Cash Received from Customers	7220000

Note 2: Cash Paid to Suppliers (Purchases)

	Purchases	4408000
Add:	Accounts Payable decreased	331100
	Cash Paid to Suppliers	4739100

Note 3: Operating expenses Paid in Cash

	Operating expenses as per Income Statement	1006500
Add:	Prepaid Expenses increased	177600
Add:	Accrued Expenses decreased	103500
Less:	Non Cash - Depreciation expense	84700
	Operating expenses paid in Cash	1202900

(Hope you will understand this, Please give your valuable feedback and if there is any query mention in comment)