The armuloperating cyle of the business or one year, whichever is longer The nor

Question

The armuloperating cyle of the business or one year, whichever is longer The normal assets are cash and ocher assets that will be coeverted into cash or used up within One year The normal operating D) The normal operating cycle of the business or one year 7 The accounting recond for Max IlI Company reported the following selected operating cycle of the business Operating Expenses Sales Returns and Allowances Sales Discounts Sales Revenue Cost of Goods Sold 180,000 52,000 24,000 00,000 268,000 Detemine Max IlI Company's gross profit. A) $308,000 8) $356,000 $332,000 R Presented below is the Statement of Cash Flows for Johanna Originals Clothing Company OHANNA ORIGINALS CLOTHING COMPANY Statement of Cash Flows For Yoar Ended December 31, 2016 Cash flows from operating activities Received freem sales to customers Interest income received S 2,000,000 40,000 (320,000) Payment for inventlory Net increase from operating activities Cash dows from investing activities $ 1,4800000 Payment for stock of another commpany Payment for purchase of equipment (200,000) $(1,000,000) s 200,000 Net decrease from investing activities Cash Sows from financing activities: Received from loans from bank From issuance of common stock From issuance of boeds Payment of dividends Net increase from financing activities 600,000 400,000 Net increase in cash min t cany's fre cash Bow A) (5600,000) C) $480,000 D) $680,000

Explanation / Answer

6 Current assets are those which are converted into cash within year or operating cycle whichever longer Correct answer is B 7 Sales revenue 700000 Sales return and allowance -52000 Sales discounts -24000 Net sales 624000 Cost of goods sold 268000 Gross profit 356000 So correct answer is B 8 Cash fkow from operaing activities 1480000 Cash used in investing activities -1000000 Free cash flow 2480000 Correct answer is C 23 X 100*6 600 Y 200 * 2 400 Z 500*6 3000 Total 4000 Correct answer is D

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