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Statement of Cash Flows for Income

Tool Time Corporation had the following 2008 income statement

Revenues $100,000
Expensese 60,000

Total 40,000

In 2008, Tool Time had the following activity in selected accounts

Accounts Receivable

01/01/2008 20,000 1,000 Writeoffs

Revenues 100,000 90,000 Collections

Ending Balance 12/31/2008 29,000 (DEBIT)

Allowance for Doubtful Accounts
1,200 01/01/2008
Writeoffs 1,000 1,540 Bad Debt Expense

Ending Balance 1,740 (CREDIT)

Prepare Tool Times cash flows from operating activities section of the statement of cash flows using (A) Direct Method and (B) Indirect Method

Solution Summary

The solution examines the statement of cash flows for income. The direct and indirect method is examined.