Respuesta :
Answer:
$22,640
The explanation is shown below:-
Explanation:
The computation of cash flow from operating activities using the direct method is shown below:-
Direct method
Pizza International, Inc.
Statement of cash inflow
Cash flow from operating expenses
Cash received from customers $143,777
($143,951 - $174)
Cash Paid
To suppliers ($53,773)
($45,700 - $651 + $8,724)
To salaries and wages ($56,855)
For office expenses ($7,730)
($7,785 + $668 - $723)
For income tax expenses ($2,779)
($50 + $2,729)
Net cash inflow from operating
activities $22,640
It is mainly due to no depreciation expenses for cash products. Depreciation expenses do not contribute to cash outflows. Because of which company has reported large cash inflow from operations compared to near net loss.
Here, we are to compute the Cash flow from operating activities using the direct method.
1. Pizza International, Inc.
Statement of cash inflow (Operating activities)
Particulars Amount
Cash received from customers $143,777
($143,951 - $174)
Cash Paid to suppliers ($53,773)
($45,700 - $651 + $8,724)
Cash Paid to salaries and wages ($56,855)
Cash Paid for office expenses ($7,730)
($7,785 + $668 - $723)
Cash Paid for income tax expenses ($2,779)
($50 + $2,729)
Net-cash inflow from operating activities $22,640
2. The primary reason that Pizza International was able to report large positive cash flow from operations despite nearly having a net loss is because of non-application of depreciation expenses for cash products.
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