. Determine cash receipts and/or payments involved with the data presented (I ha
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Question
. Determine cash receipts and/or payments involved with the data presented (I have supplied you the answer to part a in order to help you understand what I am asking):
Income Statement Balance Sheet
For year Beg year End year
a. Sales revenue (on credit) $250,000
Accounts Receivable (net) $30,000 $35,000
Cash receipts related to sales were $245,000. I figured this out by making a t-account of accounts receivable and solving for the cash collected. Note that by indicating that Accounts Receivable is net, you don’t 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 $250,000
$245,000 must be the cash collected
Ending Balance $35,000
Income Statement Balance Sheet
For year Beg year End year
b. Income taxes expense $ 42,000
Income taxes Payable $18,000 $17,000
Income Statement Balance Sheet
For year Beg year End year
c. Cost of goods sold $109,000
Inventory $34,000 $36,000
Accounts Payable $18,000 21,000
Accounts Receivable (net)
Beginning Balance $30,000
Sales on account $250,000
$245,000 must be the cash collected
Ending Balance $35,000
Explanation / Answer
Accounts Receivable Ledger Debit Credit To balance b/d 30,000 By Cash 2,45,000 To sales 2,50,000 By closing balance 35,000 Total 2,80,000 Total 2,80,000 Income Tax Payable ledger Debit Credit To Cash 43,000 By Balance b/d 18,000 By Income tax 42,000 To balance c/f 17,000 Total 60,000 Total 60,000 Inventory ledger Debit Credit To balance b/d 34,000 By cost of goods sold 1,09,000 To Purchases 1,11,000 By closing balance 36,000 Total 1,45,000 Total 1,45,000 Accounts Payable ledger Debit Credit To Cash 1,08,000 By Balance b/d 18,000 By Purchases 1,11,000 To balance c/f 21,000 Total 1,29,000 Total 1,29,000 Cash Receipts Cash Payments Accounts Receivable 245000 Income Tax 43000 Accounts Payable 108000
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