Question

1. How much cash is paid to acquire inventory during year 2017? Cash paid for inventory 2. How much cash is paid for other expenses during year 2017? (Hint Examine prepaid expenses and wages payable.) Cash paid for other expenses

Answer 1

Statement of Cash Flows
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Cash flows from operating activities
Cash receipts from customers	$     4,98,000
Cash paid to suppliers	$    -3,10,000
Cash paid for other Expenses	$       -86,300
Income taxes paid	$       -18,500
Net cash from operating activities		$        83,200
SOLUTION : 1
Cash paid for inventory=	$          3,10,000
SOLUTION : 2
Cash paid for other Expenses	$             86,300
Working notes: 1
Calculation of cash collection from customer
Sales	$          4,88,000
Add: Opening AR	$             51,000
Less: Closing AR	$             41,000
Cash Collected	$          4,98,000
Working notes: 2
Calculation of purhcase of inventory
Cost of Goods Sold	$          3,14,000
Add: Closing inventory	$             85,800
Less : Opening Inventory	$             95,800
Material Purhcased	$          3,04,000
Calculation of amount paid to supplied
Op. Balance of Acct Payabl e	$             21,000
Add: Purchases	$          3,04,000
Less: Cl. Balance of Account payable	$             15,000
Cash paid	$          3,10,000
Working notes: 3
Other Expenses
As per income statemnt	$             89,100
Add: Beginning Balance	$                5,000
Less : Closing Balance	$                9,000
Cash paid	$             85,100
Add: Beginning prepaid balanc	$                2,600
Less: Closing Prpaid balance	$                1,400
	$             86,300
Working notes: 4
Income tax
As per income statement	$             17,300
Add: Beginning Balance	$                2,600
Less : Closing Balance	$                1,400
Cash paid	$             18,500