Question

Use the following information to answer questions 16-18

Sales revenue		$778,000
Operating expenses excluding depreciation Depreciation expense Unrealized loss on FV-NI investments Loss on sale of equipment Income before income tax Income tax expense Net Income	$499,000 66,000 4,000 14,000	583,000 195,000 58,000 $137,000

There were no purchases or sales of trading (FV-NI) investments during 2014. Ellis’s statement of financial position included the following comparative data at December 31:

	2014	2013
Accounts receivable	$35,000	$54,000
FV-NI investments	22,000	26,000
Accounts payable	44,000	31,000
Income tax payable	6,000	8,500

1. How much cash was received from customers?

1. $778,000
2. $797,000
3. $759,000
4. $743,000

2. How much cash was paid for income taxes?

1. $58,000
2. $55,500
3. $60,500
4. $52,000

3. Assuming all accounts payable relate to operating expenses, how much cash was paid for operating expenses?

1. $420,000
2. $552,000
3. $512,000
4. $486,000

How to get these MCQS

Answer 1

Requirement 1

Cash received from customers = Sales Revenue + Accounts Receivable 2013 - Accounts Receivable 2014

                                             = 778000 + 54000 - 35000

                                             = 797000

Requirement 2

Cash paid for Income Taxes = Income Tax expense + Income Tax Payable 2013 - Income Tax Payable 2014

                                         = 58000 + 8500 - 6000

                                         = 60500

Requirement 3

Operating expenses paid = Operating expenses excluding depreciation + Accounts payable 2013 - Accounts payable 2014

                                     = 499000 + 31000 - 44000

                                     = 486000