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The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $375,000 and accounts receivable increased by $29,000 during the year, what was the amount of cash received from customers? $ b. If income tax for the current year was $39,000 and income tax payable decreased by $21,000 during the year, what was the amount of cash payments for income tax? $

Answer :

Answer:

a. $404,000

b. $60,000

Explanation:

a. The computation of cash received is shown below:

= Sales for the current year + increased in accounts receivable during the year

= $375,000 + $29,000

= $404,000

The increase in accounts receivable show the predicted cash which will be received in near by future. So, it is added in the computation part.

Hence, the amount of cash received from customers is $404,000

b. Computation of cash payment for income tax is shown below:

= Income tax  for the current year + decrease in income tax payable during the year

= $39,000 + $21,000

= $60,000

Both transactions should be added to know the accurate figure of income tax payment made in cash.

Hence, the cash payments for income tax is $60,000

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