Wiley Company's income statement for Year 2 follows: Sales Cost of goods sold Gross margin Selling...

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Wiley Companys income statement for Year 2 follows: Sales Cost of goods sold Gross margin Selling and administrative expense

business accounting

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Answer 1

Answer #1

Wiley Company
Cashflow Statement		Direct method

Cash flows from from Operating Activities
Sales	2,850
Adjustments to a cash basis
Opening Accounts Receivable	235
Closing Accounts Receivable	(205)
Cash collections from customers		2,880

Cash payments
Cost of goods sold	1,400
Adjustments to a cash basis
Opening Accounts Payable	83
Closing Accounts Payable	(126)
Closing Inventory	164
Opening Inventory	(190)
Cash paid to Suppliers		1,331

Selling & Administrative expenses	300
Adjustments to a cash basis
Opening Accrued Liabilties	21
Closing Accrued Liabilties	(10)
Closing Prepaid Expenses	38
Opening Prepaid Expenses	(29)
Depreciation expense	(78)
Cash paid for Selling & admin expenses		242

Income tax expense	460
Adjustments to a cash basis
Opening Income taxes payable	80
Closing Income taxes payable	(114)
Cash paid for income tax expense		426
Net Cash Provided/(Used) by Operating Activities		881

Option 1
No, gains and loss on income statement are ignored under direct method

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Answer 2

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