Exercise 12-5B Direct: Computation of cash flows LO P5 Case X: Compute cash rece

Question

Exercise 12-5B Direct: Computation of cash flows LO P5 Case X: Compute cash received from customers: Sales $ 720,000 Accounts receivable, December 31, 2013 41,000 Accounts receivable, December 31, 2014 56,580 Case Y: Compute cash paid for rent: Rent expense $ 110,000 Rent payable, December 31, 2013 12,550 Rent payable, December 31, 2014 10,793 Case Z: Compute cash paid for merchandise: Cost of goods sold $ 682,000 Merchandise inventory, December 31, 2013 211,420 Accounts payable, December 31, 2013 88,796 Merchandise inventory, December 31, 2014 173,364 Accounts payable, December 31, 2014 110,107 For each of the above three separate cases, use the information provided about the calendar-year 2014 operations of Sahim Company to compute the required cash flow information.

Explanation / Answer

                              =720,000 – 15,580

                              =$704,420

                                         =110,000+1,757

                                         =$111,757

=682,000 – 38,060 – 21,311

=$622,629

1. Cash receivable = sales – increase in account receivable

                              =720,000 – 15,580

                              =$704,420

1. Cash paid for rent = Rent expenses + decrease in rent payable

                                         =110,000+1,757

                                         =$111,757

1. Cash paid for merchandise = COGS – decrease in inventory – increase in account payable

=682,000 – 38,060 – 21,311

=$622,629

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