Question

The 2020 accounting records of Novak Corp. reveal these transactions and events.

Payment of interest $10,000 Collection of accounts receivable $190,100
Cash sales 50,800 Payment of salaries and wages 57,100
Receipt of dividend revenue 18,800 Depreciation expense 16,300
Payment of income taxes 16,900 Proceeds from sale of vehicles 12,100
Net income 38,400 Purchase of equipment for cash 22,800
Payment of accounts payable Loss on sale of vehicles 2,900
for merchandise 115,600 Payment of dividends 14,200
Payment for land 73,300 Payment of operating expenses 28,300

Required:
Prepare the cash flows from operating activities section using the direct method.

Answer 1

Statement of Cash Flows (Direct Method)

For Year Ended December 31, 2020

Particulars Amount

Cash Flows from operating activities:

Cash Receipts from:

Customers ($50800+ $190100) $240,900

Dividend Revenue $18,800 $259,700

Less: Cash payments:

For Interest -$10,000

For Income Taxes -$16,900

To suppliers for Merchandise -$115,600

For Salaries and wages -$57,100

For Operating Expenses -$28,300 -$227,900

Net Cash provided by operating activities $31,800