Hairston Company completed its first year of operations onDecember 31, 2007. Its
ID: 2457865 • Letter: H
Question
Hairston Company completed its first year of operations onDecember 31, 2007. Its initial income statement showed thatHairston had revenues of $192,000 and operating expenses of$78,000. Accounts receivable and accounts payable at year-end were$60,000 and $23,000, respectively. Assume that accounts payablerelated to operating expenses. Ignore income taxes.
Compute net cash provided by operating activities using thedirect method. (If an amount decreases cash flow,then show it with a - sign preceding the number ie:-14,500.)
$
Cash receipts from customers $ Cash payments for operating expenses Net cash usedprovided by operating activities$
Explanation / Answer
Cash receipts fromcustomer = Revenue + Debtrors (brginning) -Debtors (ending) = $192000 + 0 - $60000 = $132,000 Cash payaments foroperating expense = Expense accrul - Outstanding (ending) + Outstanding(beginning) = $78000 - $23000 = $55,000 Net cash provided byoperating activities = $132000 - $55000 = $77000
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