The following selected account balances were taken from Buckeye Company\'s gener

Question

 The following selected account balances were taken from Buckeye Company's general ledger at
January 1, 2005 and December 31, 2005:                    January 1, 2005         December 31, 2005    Unearned revenue       12,000                20,000   Inventory              59,000                42,000   Accounts payable       40,000                51,000   Salaries payable        9,000                 3,000   Investments            75,000                68,000   Accounts receivable    63,000                96,000   Land                   58,000                88,000   Mortgage payable      120,000                95,000   Common stock          100,000               180,000   Retained earnings      22,000                35,000  The following information was taken from Buckeye Company's 2005 income statement:    Sales revenue                   $420,000   Cost of goods sold               300,000   Salaries expense                  88,000   Loss on sale of investments        6,000   Net income                      $ 26,000  Calculate the amount of cash paid to employees for salaries during 2005. Do not use decimals
in your answer. 

Explanation / Answer

Cash collected from customers during 2005 = Sale Revenue + Unearned revenue at the end - Unearned revenue at the beginning + Accounts receivable at the beginning - Accounts receivable at the end Cash collected from customers during 2005 = 420000 + 20000 - 12000 + 63000 - 96000 Cash collected from customers during 2005 = $ 395000

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