Computation of Operating Cash Flows
the Financial Statements of Custom

question 135

Essay

Computation of operating cash flows
The financial statements of Custom Corporation provide the following information for the current year:
$$\begin{array} { | l | r | r | } \hline & \begin{array} { c } \text { End of } \\\text { Year }\end{array} & \begin{array} { c } \text { Begirning of } \\\text { Year }\end{array} \\\hline \text { Accounts receivable } & \$ 201,000 & \$ 221,000 \\\hline \text { Irventory } & \$ 249,000 & \$ 233,000 \\\hline \text { Short-tem prepayments } & \$ 12,000 & \$ 9,500 \\\hline \text { Accounts payable (for irventory) } & \$ 177,000 & \$ 170,000 \\\hline \text { Accrued operatirg expenses payable } & \$ 25,500 & \$ 33,200 \\\hline \text { Accrued income taxes payable } & \$ 12,600 & \$ 15,500 \\\hline \text { Net sales } & \$ 801,000 & \\\hline \text { Cost of goods sold } & \$ 465,000 & \\\hline \text { Operating expenses (including depreciation of } \$ 40,000 ) & \$ 300,000 & \\\hline \text { Income taxes expense } & \$ 39,000 & \\\hline\end{array}$$ Using this information, compute for the current year:
$\begin{array}{|l|l|}\hline \text { (a) Cash receipts from customers } & \$\_\_\_\_ \\\hline \text { (b) Cash payments for purchases of inventory } & \$ \_\_\_\_\\\hline \text { (c) Cash payments for operating expenses } & \$\_\_\_\_ \\\hline \text { (d) Income taxes paid } & \$ \_\_\_\_\\\hline\end{array}$

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Definitions:

Minimum Wage Laws

Legislation that sets the lowest hourly wage rate that an employer can legally pay its employees.

Natural Rate

A theoretical concept referring to the equilibrium level of a variable, such as unemployment or interest, under normal economic conditions without short-term distortions.

Unemployment

A situation where individuals who are capable and willing to work are unable to find employment.

Unemployment Insurance

A government program that provides temporary financial assistance to eligible workers who have lost their jobs.