Stmnt of cash flow direct method

Lleymal16y ago

Please can someone help me on this. I was looking at the stmnt of cash flow on lecture 4 open tutuition.example 2 page 91. total cash recieved worked out from receivables balances and same bad debt (14K)subtracted again later on.
why do we deduct bad debt twice. it has alrady been deducted when work out total cash received.

Sshimmer16y ago#1

I can't understand why w eare adding 160K and subtracting 140K in cash payments to suppliers..

Lleymal16y ago#2

we are trying to find how much we paid suppliers. you have the cost of sales figure of 840 you know openin inventory of 140K and closing 160K. and you find total purchases and from here how much you have paid to suppliers.
cos. is opening inventory+purchases less closing inventory.
840=140+X-160
hope this helps.

John MoffatTutor16y ago#3

@leymal said:
Please can someone help me on this. I was looking at the stmnt of cash flow on lecture 4 open tutuition.example 2 page 91. total cash recieved worked out from receivables balances and same bad debt (14K)subtracted again later on.
why do we deduct bad debt twice. it has alrady been deducted when work out total cash received.

The irrecoverable debt was dealt with in receivables because the cash received from receivables was lowers (cos nothing received from the irrecoverable).

It was removed from the expenses because it was not a cash expense.

Lleymal16y ago#4

hmmm, got it. thanks very much, much appreciated.

Sshimmer16y ago#5

@johnmoffat said:
The irrecoverable debt was dealt with in receivables because the cash received from receivables was lowers (cos nothing received from the irrecoverable).

It was removed from the expenses because it was not a cash expense.

okay and what about employments costs?...even they have been subtracted and added again...