Warner Island, Inc. began 2018 with cash of $75,000. During the year, Warner Island earned revenue...
Warner Island, Inc. began 2018 with cash of $75,000. During the year, Warner Island earned revenue of $240,000 and collected $90,000 from customers. Expenses for the year totaled $157,000, of which Warner Island paid $75,000 in cash to suppliers and $70,000 in cash to employees. The company received $2,500 cash for interest revenue and paid $15,000 for income taxes. Warner Island also paid $26,000 to purchase equipment and a cash dividend of $26,000 to its stockholders during 2018. Prepare the company's operating activities section of the statement of cash flows for the year ended December 31, 2018. Use the direct method.
Homework Answers
Statement of cash flow (Partial)
| Collection from customer | 90,000 |
| Interest receipts | 2,500 |
| Total cash receipts | 92,500 |
| Cash payments : | |
| Payment to supplies | -75,000 |
| Payment to employees | -70,000 |
| Payment for income tax | -15,000 |
| Net cash used in operating activities | - $67,500 |
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