Suppose your company sells goods for $300, of which $200 is received in cash and $100 is on account. The goods cost your company $125 and were paid for in a previous period. Your company also recorded...

Suppose your company sells goods for $300, of which $200 is received in cash and $100 is on
account. The goods cost your company $125 and were paid for in a previous period. Your company
also recorded salaries and wages of $70, of which only $30 has been paid in cash.
Required:
1. Show the journal entries to record these transactions.
2. Calculate the amount that should be reported as net cash flow from operating activities.
3. Calculate the amount that should be reported as net income.
4. Show how the indirect method would convert net income (requirement 3) to net cash flow
from operating activities (requirement 2).
5. What general rule about converting net income to operating cash flows is revealed by your
answer to requirement 4?