Operating Cash Flows $($Direct Method$)$

Lincoln Company owns no plant assets and reported the following income statement for the current year:

Sales $ $790,000$

Cost of goods sold $ $430,000$

Wages expense $110,000$

Rent expense $42,000$

Insurance expense $11,000593,000$

Net income $ $197,000$

Additional balance sheet information about the company follows:

End of Year Beginning of Year

Accounts receivable $ $50,000$ $ $49,000$

Inventory $60,00061,000$

Prepaid insurance $16,0007,000$

Accounts payable $22,00018,000$

Wages payable $9,00010,000$

Calculate the net cash flow from operating activities using the direct method. Show a related cash flow for each revenue and expense.

Use a negative sign with your answer to show that a change in account reduced cash received or cash paid.

Sales Answer

$790,000$

Accounts Receivable Answer

$(1,000)$

Cash Received from Customers Answer

$789,000$

Cost of Goods Sold Answer

$430,000$

Inventory Answer

$(1,000)$

Accounts Payable Answer

$(22,000)$

Cash Paid for Merchandise Purchased Answer

$425,000$

Wages Expense Answer

$110,000$

Wages Payable Answer

$(1,000)$

Cash Paid to Employees Answer

$111,000$

Insurance Expense Answer

$7,000$

Prepaid Insurance Answer

$9,000$

Cash Paid for Insurance Answer

$9,000$

Do not use negative signs for this portion of the problem.

Operating Activities

Cash Received from Customers Answer

$626,000$

Cash Paid for Merchandise Purchased Answer

$433,000$

Cash Paid to Employees Answer

$1,000$

Cash Paid for Rent Answer

$42,000$

Cash Paid for Insurance Answer

$1,000$

Answer

$477,000$

Net Cash Provided by Operating Activities Answer

$149,000$