This post addresses the Melvin Company cash flows exercise.
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Melvin Company's income statement for the year ended December 31, 2012, contained the following condensed information.
Revenue from fees $830,220
Operating expenses (excl. depreciation) $625,300
Depreciation expense 62,250
Loss on sale of equipment 28,130
715,680
Income before taxes 114,540
Income tax expense 39,140
Net income $75,400
Melvin's balance sheet contained the following comparative data at December 31.
2012 2011
Accounts receivable $36,330 $58,320
Accounts payable 46,020 30,620
Income taxes payable 4,500 8,070
(Accounts payable pertains to operating expenses.)
Instructions
Prepare the operating activities section of the statement of cash flows using the direct method.
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Solution Summary
The solution provides the correct presentation of the operating activities section of the statement of cash flows using the direct method for Melvin Company.
Solution Preview
The operating activities section under the direct method will look like this:
Cash flows from operating activities
Cash receipts from customers (830220 - 21990 (difference in A/R) 808,230
Cash payments, for ...
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