The income statement of Wildhorse Company is shown below. WILDHORSE COMPANY INCO
ID: 2596443 • Letter: T
Question
The income statement of Wildhorse Company is shown below. WILDHORSE COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $6,910,000 Cost of goods sold Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold $1,920,000 4,420,000 6,340,000 1,590,000 4,750,000 2,160,000 Gross profit Operating expenses Selling expenses Administrative expenses 450,000 710,000 1,160,000 $1,000,000 Net income Additional information: 1. Accounts receivable decreased $370,000 during the year. 2. Prepaid expenses increased $170,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $280,000 during the year. 4. Accrued expenses payable decreased $110,000 during the year. 5. Administrative expenses include depreciation expense of $60,000.Explanation / Answer
Cash receipts from Customers = Net sales + decrease in accounts receivable
= $6910000 + $370000
= $7280000
Cash payment to supplier = Purchases + ending inventory - beginning inventory + decrease in accounts payable
= $4420000 + 1590000 - 1920000 + $280000
= $8210000
Cash payment for operating expenses = Operating expenses + increase in prepaid expenses + decrease in accrued expenses payable - Depreciation
= $1160000 + $170000 + $110000 - $60000 = $1380000
Cash flow from operating activities:
Cash receipts from customers $7280000
Cash payment to suppliers ($8210000)
Cash payment for operating expense ($1380000)
Cash used in operatinv activities ($2310000)
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