Summary Business Accounting

Question:

The following are summary cash transactions that occurred during the year for Hilliard Healthcare Co.

(HHC):




Prepare the cash flows from operating activities section of HHC’s statement of cash flows using the direct

method.



Answer:



Cash flows from operating activities:

Collections from customers $ 660,000

Interest on note receivable 12,000

Interest on note payable (18,000)

Payment of operating expenses (440,000)

Net cash flows from operating activities $214,000



Only these four cash flow transactions relate to operating activities. The others are investing and

financing activities.