The following information pertains to Peak Heights Company: Income Statement for Current Year Sales $ 93,000 Expenses Cost of goods sold $ 51,875 Depreciation expense 6,000 Salaries expense 12,000 69,875 Net income $ 23,125 Partial Balance Sheet Current year Prior year Accounts receivable $ 10,500 $ 12,000 Inventory 13,000 8,000 Salaries payable 2,250 800 Required: Present the operating activities section of the statement of cash flows for Peak Heights Company using the direct method. (List cash outflows as negative amounts.)

                                     Peak Heights Company

                               Cashflow Statement (Extract)

Cashflow from Operating Activities

Cash Receipts from Customers                                                    $94500

Cash paid to Suppliers and Employees                                      ($25450)

Cash Generated from Operations                                                     $0

Net Cashflow from Operating Activities                                       $69050                      

Explanation:

Cash Receipts from Customers

Open a Trade and Other Receivables - T Account and the balancing figure is the cash receipts from customers

Opening Accounts Receivables $ 12000(debit)

Sales for the Year $ 93000

Closing Accounts Receivables$10500(credit)

Bank (Balancing Figure) $ 94500 (credit)

Therefore Cash Receipts from Customers is $94500

Cash paid to Suppliers and Employees

Sales                                                               $ 93,000

Less Cost of goods sold                                $ 51,875

Gross Profit                                                     $ 41,125

Less Net income                                             $ 23,125

Expenses                                                         $18,000

Calculation for Cash Expenses (Suppliers and Employees)

Expenses                                                                           $18,000

Add Depreciation expense                                               $6,000

Add Increase in Accounts payable(2250-800)                $1,450

Cash paid to Suppliers and Employees                          $25450

i think it is sales-oriented, but i am not sure

i think the answer to your question is b. directive