The income statement for Blues Traveler Company shows cost of goods sold $308,56
ID: 2473459 • Letter: T
Question
The income statement for Blues Traveler Company shows cost of goods sold $308,560 and operating expenses (exclusive of depreciation) $231,710. The comparative balance sheet for the year shows that inventory increased $21,500, prepaid expenses decreased $7,900, accounts payable (related to merchandise) decreased $16,760, and accrued expenses payable increased $13,950. Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.
(a) Cash payments to suppliers $
(b) Cash payments for operating expenses $
Explanation / Answer
COST OF GOODS SOLD
= NET PURCHASES + BEGINNING INVENTORY - ENDING INVENTORY
$308560 = NET PURCHASES - $21500
NET PURCHASE = $330060
CASH PAID TO SUPPLIER
= NET PURCHASES + BEGINNING ACCOUNTS PAYABLE - ENDING ACCOUNTS PAYABLE
= $330060 + $16760
= $346820
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B./
CASH PAYMENT FOR OPERATING EXPENSES
= OPERATING EXPENSES - DECEREASE IN PREPAID EXPENSES - INCEREASE IN ACCURED EXPENSES PAYBLE
= $231710 - $7900 - $13950
= $209860
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