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Big Time Co had the following transactions during the year.
1 Purchase from suppliers was $18,500, of which $2,550 was unpaid at the year-end. Brought
forward payables were $1,000.
2 Wages and salaries amounted to $9,500, of which $750 was unpaid at the year-end. The
financial statements for the previous year showed an accrual for wages and salaries of $1,500.
3 Interest of $2,100 on a long term loan was paid in the year.
4 Sales revenue was $33,400, including $900 receivables at the year-end. Brought forward
receivables were $400.
Using the direct method, what is Big Time Co’s cash flow from operating activities?i dont get the second transaction can you elaborate on that
Given that $750 was unpaid at the year end, the actual cash paid was 9,500 – 750 = $8,750
Oops, I had not noticed that extra line 🙁
Yes, we add the 1,500 because it will have been paid this year.
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