Question

Part 2. Determine cash receipts and/or payments involved with the data presented (You are supplied the answer to part a in order to help you understand what you are asked to to):

a. Solve for how much cash was received from customers:

                                             Income Statement                         Balance Sheet

                                                       For year                            Beg year            End year

   Sales revenue (on credit)             $500,000          

   Accounts Receivable (net)                                                   $30,000                                                                           $55,000

Cash receipts related to sales were $475,000. You can figure this out by making a t-account of accounts receivable and solving for the cash collected. $30,000 + $500,000 – X = $55,000. X=$475,000. Note that by indicating that Accounts Receivable is net, you do not need to worry about bad debts or the allowance for doubtful accounts in this setting.

Accounts Receivable (net)
Beginning Balance                     $30,000 Sales on account                      $500,000	$475,000 must be the cash collected
Ending Balance                         $55,000

b. Solve for how much cash was paid for salaries:

     

                                         Income Statement                         Balance Sheet

                                                       For year                            Beg year           End year

     Salary expense              $ 66,000                                

     Salary Payable                                                                                                                                             $47,000             $58,000

c.    Solve for how much cash was paid to suppliers:

Hint first solve for purchases by analyzing the inventory account then solve for cash paid to suppliers by analyzing Accounts Payable

                                            Income Statement                         Balance Sheet

                                                       For year                            Beg year            End year             Cost of Goods Sold                         $102,000                                                                    

Inventory                                                                                 $35,000       $48,000

Accounts Payable                                                                    $24,000       $16,000

Answer 1

Answer with working is given below

b. Cash paid for salary expense $55,000 Opening balance Add: Salary expense during the year $47,000 $66,000 $113,000 $58,000 $55,000 Less: Closing balance Cash paid for salaries c. Cash paid to suppliers $123,000 Cost of Goods Sold Add: Increase in Inventory Total Purchase Add: Opening balance of Creditors $102,000 $13,000 $115,000 $24,000 $139,000 $16,000 $123,000 Less: Closing balance of Creditors Cash paid to supplies