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Horngren'S Financial And Managerial Accounting
Found in: Page 772

Short Answer

Preparing a statement of cash flows using the direct method Jelly Bean, Inc. began 2018 with cash of $58,000. During the year, Jelly Bean earned revenue of $595,000 and collected $614,000 from customers. Expenses for the year totaled $427,000, of which Jelly Bean paid $212,000 in cash to suppliers and $205,000 in cash to employees. Jelly Bean also paid $148,000 to purchase equipment and a cash dividend of $57,000 to its stockholders during 2018. Prepare the company’s statement of cash flows for the year ended December 31, 2018. Format operating activities by the direct method.

Net Increase/(Decrease) in cash is ($8,000).

See the step by step solution

Step by Step Solution

Step-by-Step SolutionStep 1: Cash flow from operating activities

Cash flows from operating activities


Collection from customers



To suppliers


To employees


Net cash provided by operating activities


Step 2: Statement of cash flows- direct method

Jelly Bean Inc.

Statement of cash flows

Year ended 31st December, 2018

Cash flows from operating activities


Cash flows from investing activities

Cash purchase of equipment


Net cash used for investing activities


Cash flows from financing activities

Cash payment of dividends


Net cash provided by financing activities


Net Increase/(Decrease) in cash


Cash balance, December 31, 2017


Cash balance, December 31, 2018


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