reporting operating cash flows by the direct method 421862

The following income statement and selected balance sheet account data are available for Treece, Inc., at December 31, 2011.

Revenue:

Net Sales …………………………………… 2,850,000

Divident Income ….. ……………………… 104,000

Interest Income ……………………………. 70,000

Gain on sales of marketable securities …. 4,000

Total Revenue and Gains ………………. 3,028,000

Costs and Expenses:

Cost of good sold ………………………….. 1,550,000

Operating expense ………………………… 980,000

Interest Expense …………………………… 185,000

Income tax expense ………………………. 90,000

Total Costs and Expenses …………….. 2,805,000

Net Income …………………………………. 223,000

Selected account balances:

End of Year Beginning of Year

Accounts recievable ………………………….. 650,000 ……………………. 720,000

Accrued Interest recievable …………………. 9,000 ……………………….. 6,000

Inventories …………………………………….. 800,000 …………………… 765,000

Short term prepayments …………………….. 20,000 ……………………… 15,000

Accounts Payable (merchandise suppliers)…. 570,000 …………………… 562,000

Accrued operating expense payable ………… 65,000 …………………….. 94,000

Accrued Interest Payable …………………….. 21,000 …………………….. 12,000

Accrued income taxes payable ………………. 22,000 ……………………… 35,000

Additional Information:

1. Divident revenue is recognized on the cash basis. All othe rincome statement amounts are recognized on the accrual basis.

2. Operating expenses include depreciation expense of $ 115,000

Instructions:

a) Prepare a partial statement of cash flows, including only the operating activities section of the statement and using the direct method. Place brackets around numbers representing cash payments. Show supporting computations for the following:

1. Cash recieved from customers

2. Interest and dividents received

3. Cash paid to suppliers and employees

4. Interest paid

5. Income taxes paid

6. Cash used in operating activities

7. Net cash flow from operating activities.