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Cash flows from operating activities-direct method
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 $513,750 and accounts receivable decreased by $32,625 during the year, what was the amount of cash received from customers?
b. If income tax expense for the current year was $34,500 and income tax payable decreased by $3,900 during the year, what was the amount of cash payments for income tax?
c. Briefly explain why the cash received from customers in (a) is different than sales.
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