P12-6B Prepare the operating activities section-direct method 2 Mosley\'s Compan
ID: 2341713 • Letter: P
Question
P12-6B Prepare the operating activities section-direct method 2 Mosley's Company's income statement contained the condensed information below MOSLEY COMPANY Income Statement For the Year Ended December 31, 2014 Service revenue Operating expenses, excluding depreciation Depreciation expense Loss on disposal of plant assets Income before income taxes Income tax expense Net income $850,000 $506,000 56,000 10 4,000 $566,000 $284,000 80,000 204.000 12 13 l 14 15 16 Mosley's balance sheet contained the comparative data at December 31, below. 17 18 19 2014 Accounts receivable Accounts payable Income taxes payable 2013 $72,000 $65,000 27,000 35,000 23,000 8,000 21 22 Accounts payable pertains to operating expenses. 23 24 Instructions 25 Prepare the operating activities section of the statement of cash flows using the direct method. 26 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "? 27Explanation / Answer
Ans. MOSLEY COMPANY Partial Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities: Cash receipts from customers 843000 Less: Cash payments: For operating expenses -514000 For income taxes -75000 -589000 Net cash provided by operating activities 254000 Computations: 1 Cash receipts from customers: Revenues 850000 Deduct: Increase in accounts receivables (72000-65000) -7000 Cash receipts from customers 843000 2 Cash payments for operating expenses: Operating expenses per income statement 506000 Add: Decrease in accounts payables (27000-35000) 8000 Cash payments for operating expenses 514000 3 Cash payments for income taxes: Income tax expenses per income statement 80000 Deduct: Increase in income taxes payable (23000-18000) -5000 Cash payments for income taxes 75000
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