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    Ernest Banks Company

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    Solution to P14-7A is also attached for reference.

    Financial Accounting, 5th ed., ISBN : 0471655279, Author : Jerry J. Weygandt
    Chapter 14P14-8A

    Prepare a statement of cash flows?direct method. (SO 4)
    Data for Ernest Banks Company is presented in P14-7A. Further analysis reveals the following.
    Accounts payable relates to merchandise creditors.
    All operating expenses, except depreciation expense, were paid in cash.
    Prepare a statement of cash flows for Ernest Banks Company for the year ended December 31, 2006, using the direct method.
    Net cash provided by operating activities $28,000
    Investing activities provided $2,500

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    Solution Preview

    Ernest Banks Company
    Statement of Cash Flows - Direct Method
    For the year ended December 31, 2006

    Cash Flows from operating activities:
    Cash Receipts from Customers $609,000
    Cah Payments
    To Suppliers $502,500
    For operating Expenses 65,000
    For interest 5,500
    For income tax 8,000 581,000
    Net cash Provided by operating ...

    Solution Summary

    The solution explains how to prepare a statement of cash flows using the direct method for Ernest Banks Company