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Analyzing Operating Cash Flows (Direct Method) Lincoln Company owns no plant assets and reported the following income statement for the current year:
| Sales | | $600,000 |
| Cost of goods sold | $376,000 | |
| Wages expense | 88,000 | |
| Rent expense | 33,600 | |
| Insurance expense | 12,000 | 509,600 |
| Net income | | $90,400 |
| | End of Year | Beg. of Year |
| Accounts receivable | $59,400 | $53,900 |
| Inventory | 66,000 | 72,600 |
| Prepaid insurance | 8,800 | 7,700 |
| Accounts payable | 24,200 | 19,800 |
| Wages payable | 9,900 | 12,100 |
Calculate the net cash flow from operating activities using the direct method. Show a related cash flow for each revenue and expense.
| Cash Flows from Operating Activities (Direct Method) |
| Cash Received from Customers | | Answer |
| Cash Paid for Merchandise Purchased | Answer | |
| Cash Paid to Employees | Answer | |
| Cash Paid for Rent | Answer | |
| Cash Paid for Insurance | Answer | Answer |
| Net Cash Provided by Operating Activities | | Answer |
Compute its operating cash flow to current liabilities (OCFCL) ratio. (Assume current liabilities consist of accounts payable and wages payable.)
Round answer to two decimal places. Answer
Answer & Explanation
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