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Operating section of statement of cash flows

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1. ASSUME MARLIN HAD NO INVESTING OR FINANCING TRANSACTIONS DURING 2007.

DECEMBER 31 2006 2007

CASH $65,000 $107,000
ACCOUNTS RECEIVABLE 75,000 78,000
PREPAID RENT 900 800
ACCOUNTS PAYABLE 33,000 34,000
UTILITIES PAYABLE 1,200 1,500

SALES REVENUE $272,000
OPERATING EXPENSES (168,000)
UTILITIES EXPENSE (36,400)
RENT EXPENSE (24,000)
_________
NET INCOME $43,600

A. PREPARE THE OPERATING ACTIVITIES SECTION OF THE 2007 STATEMENT OF CASH FLOWS USING THE DIRECT METHOD.

B. PREPARE THE OPERATING ACTIVITIES SECTION OF THE 2007 STATEMENT OF CASH FLOWS USING THE INDIRECT METHOD.

2. IDENTIFY WHETHER THE CASH FLOWS IN THE FOLLOWING LIST SHOULD BE CLASSIFIED AS OPERATING ACTIVITIES, INVESTING ACTIVITIES, OR FINANCING ACTIVITIES ON THE STATEMENT OF CASH FLOWS (ASSUME THE USE OF THE DIRECT METHOD).

A. SOLD MERCHANDISE ON ACCOUNT
B. PAID EMPLOYEE SALARY
C. RECEIVED CASH PROCEEDS FROM BANK LOAN
D. PAID DIVIDENDS
E. SOLD USED EQUIPMENT FOR CASH
F. RECEIVED INTEREST INCOME ON A CERTIFICATE OF DEPOSIT
G. ISSUED STOCK FOR CASH
H. REPAID BANK LOAN
I. PURCHASED EQUIPMENT FOR CASH
J. PAID INTEREST ON LOAN.

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The solution explains how to prepare the operating activities section of statement of cash flows using the direct and indirect method

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