Suppose your company sells services for $325 cash this month. Your company also pays $100 insalaries and wages, which includes $15 that was payable at the end of the previous month and $85 forsalaries and wages of this month.Required:1. Show the journal entries to record these transactions.2. Calculate the amount that should be reported as net cash flow from operating activities.3. Calculate the amount that should be reported as net income.4. Show how the indirect method would convert net income (requirement 3) to net cash flowfrom operating activities (requirement 2).5. What general rule about converting net income to operating cash flows is revealed by youranswer to requirement 4?
Suppose your company sells services for $325 cash this month. Your company also pays $100 in
salaries and wages, which includes $15 that was payable at the end of the previous month and $85 for
salaries and wages of this month.
Required:
1. Show the
2. Calculate the amount that should be reported as net cash flow from operating activities.
3. Calculate the amount that should be reported as net income.
4. Show how the indirect method would convert net income (requirement 3) to net cash flow
from operating activities (requirement 2).
5. What general rule about converting net income to operating
answer to requirement 4?
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