Question

The income statement of the Vince Gill Company is shown below. $ 6,900,000 VINCE GILL COMPANY Income Statement For The Year Ended December 31, 2017 Sales Cost of goods sold Beginning inventory $ 1,900,000 Purchases 4,400,000 Goods available for sale 6,300,000 Ending inventory 1,600,000 Cost of goods sold Gross profit Operating expenses Depreciation expense 60,000 Selling expenses 420,000 Administrative expenses 670,000 Net income 4,700,000 2,200,000 1,090,000 1,110,000 $ Additional information: 1. Accounts receivable balance 2. Prepaid expenses balance 3. Accounts payable balance 4. Accrued expenses balance $ $ A 12/31/2017 12/31/2016 440,000 $ 800,000 470,000 $ 300,000 375,000 $ 650,000 180,000 $ 280,000 A A

Answer 1

Calculation of Cash receipts from customers (Amounts in $)

Sales for the year 2017	6,900,000
Add: Decrease in Accounts Receivable (800,000-440,000)	360,000
Cash receipts from customers	7,260,000

Calculation of Cash Payment to Suppliers (Amounts in $)

Balance of Accounts Payable as on 12/31/16	650,000
Add: Purchases for the year 2017	4,400,000
Less: Balance of Accounts Payable as on 12/31/17	375,000
Cash payments to suppliers	4,675,000

Calculation of Cash payments for Operating Expenses (Amounts in $)

Total operating expense except depreciation (1,090,000-60,000)	1,030,000
Less: Increase in prepaid expenses (470,000-300,000)	170,000
Less: Decrease in Accrued Expenses (280,000-180,000)	100,000
Cash payments for operating expenses	760,000

Partial Statement of cash flows is shown as follows:- (Amounts in $)

VINCE GILL COMPANY
Partial Statement of Cash Flows
For The Year Ended December 31, 2017
Cash flows from operating activities:
Cash receipts from customers		7,260,000
Cash payments to suppliers	4,675,000
Cash payments for operating expenses	760,000
Total cash outflows		5,435,000
Net cash provided by operating activities		1,825,000