Suppose your company sells services of $180 in exchange for $110 cash and $70 on account. Required:

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Suppose your company sells services of $180 in exchange for $110 cash and $70 on account.

Required:

1. Show the journal entry to record this transaction.

2. Identify the amount that should be reported as net cash flow from operating activities.

3. Identify the amount that would be included in net income.

4. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).

5. What general rule about converting net income to operating cash flows is revealed by your answer to requirement 4?

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Managerial Accounting

ISBN: 978-0078025518

2nd edition

Authors: Stacey Whitecotton, Robert Libby, Fred Phillips

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Question Posted: Feb 27, 2015 10:41 AM

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Suppose your company sells services of $180 in exchange for $110 cash and $70 on account. Required:

Question:

Step by Step Answer:

Req 1 dr Cash A dr Accounts Receivable A 110 70 cr Service Revenue R SE 180 Req ...View the full answer

Managerial Accounting

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