Question

Refer to the information in Problem 12-1B.

Required

Prepare the cash flows from operating activities section only of the company’s 2017 statement of cash flows using the direct method.

Short answer

Cash flow from operation totals$51,960.

Step-by-step solution

Definition of Cash Flow from Operation

Cash flow from operation refers to that part of cash flow statements that deals with cash inflow and outflow related to the business's activities that are routine in nature.

Statement of cash flow using the direct method

Particular	Amount $
Cash received from the customer$\left(\$156,000-\$600\right)$	$155,400
Cash paid for inventory$\left(\$72,000+\$200-\$120\right)$	(72,080)
Cash paid for salaries expenses $\left(\$20,000-\$300\right)$	(19,700)
Cash paid for utility expenses$\left(\$2,000-\$200\right)$	(1,800)
Cash paid for insurance expenses$\left(\$2,600-\$40\right)$	(2,560)
Cash paid for interest expenses	(2,400)
Cash paid for rent expenses$\left(\$5,000-\$100\right)$	(4,900)
Cash flow from operations	$51,960