Power Corporation owns 75 percent of Surge Companys stock; no intercompany purchases or sales were made in
Question:
Power Corporation owns 75 percent of Surge Company’s stock; no intercompany purchases or sales were made in 20X4. For the year, Power and Surge reported sales of $300,000 and $200,000 and cost of goods sold of $160,000 and $95,000, respectively. Power’s inventory increased by $35,000, but Surge’s decreased by $15,000. Power’s accounts receivable increased by $28,000 and its accounts payable decreased by $17,000 during 20X4. Surge’s accounts receivable decreased by $10,000 and its accounts payable increased by $4,000.
Required
Using the direct method of computing cash flows from operating activities, compute the following:
a. Cash received from customers.
b. Cash payments to suppliers.
c. Cash flows from operating activities, assuming there were no other cash flows from operations.
Step by Step Answer:
Advanced Financial Accounting
ISBN: 9781260772135
13th Edition
Authors: Theodore Christensen, David Cottrell, Cassy Budd