Bragg Mechanical Inc. shows the following information at the end of the year: Sa
ID: 2699056 • Letter: B
Question
Bragg Mechanical Inc. shows the following information at the end of the year:
Sales
$ 690,000
Cost of good sold
410,000
Salaries expense
90,000
Insurance expense
20,000
Income tax expense
22,000
Increase in accounts receivable
9,000
Decrease in inventory
8,000
Increase in accounts payable
14,000
Increase in salaries payable
13,000
Decrease in taxes payable
2,000
Calculate the cash flows from operating activities using the direct method and prepare the operating section of the statement of cash flows for Bragg Mechanical.
Sales
$ 690,000
Cost of good sold
410,000
Salaries expense
90,000
Insurance expense
20,000
Income tax expense
22,000
Increase in accounts receivable
9,000
Decrease in inventory
8,000
Increase in accounts payable
14,000
Increase in salaries payable
13,000
Decrease in taxes payable
2,000
Explanation / Answer
Cash Collections Receipts from Sales
= Sales + Decrease (or - increase) in Accounts Receivable
= 690,000- 9000 =681000
Cash payments for purchases = cost of goods sold + increase (or - decrease) in inventory + decrease (or - increase) in accounts payable
=410000- 14000 -8000=388000
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