Determination of Missing Amounts—Cash Flow from Operating Activities Required: T
ID: 2751724 • Letter: D
Question
Determination of Missing Amounts—Cash Flow from Operating Activities
Required:
The computation of cash provided by operating activities requires analysis of the noncash current asset and current liability accounts. Using T accounts, determine the missing amounts for each of the following independent cases:
Case 1 Accounts receivable, beginning of year $144,000 Accounts receivable, end of year 81,000 Credit sales for the year 167,000 Cash sales for the year 65,000 Write-offs of uncollectible accounts 32,000 Total cash collections for the year (from cash sales and collections on account) $ Case 2 Inventory, beginning of year $36,000 Inventory, end of year 68,000 Accounts payable, beginning of year 31,000 Accounts payable, end of year 19,000 Cost of goods sold 185,000 Cash payments for inventory (assume all purchases of inventory are on account) $ Case 3 Prepaid insurance, beginning of year $20,000 Prepaid insurance, end of year 22,000 Insurance expense 18,000 Cash paid for new insurance policies $ Case 4 Income taxes payable, beginning of year $85,000 Income taxes payable, end of year 103,000 Income tax expense 62,000 Cash payments for taxes $Explanation / Answer
Case 1
Accounts receivable, beginning of year
$144,000
Accounts receivable, end of year
81,000
Credit sales for the year
167,000
Cash sales for the year
65,000
Write-offs of uncollectible accounts
32,000
Total cash collections for the year (from cash sales and collections on account)
$65,000 + $144000-$81000-32000
= $96000
Case 2
Inventory, beginning of year
$36,000
Inventory, end of year
68,000
Accounts payable, beginning of year
31,000
Accounts payable, end of year
19,000
Cost of goods sold
185,000
Cash payments for inventory (assume all purchases of inventory are on account)
$68000-$36000 = $32000
Case 3
Prepaid insurance, beginning of year
$20,000
Prepaid insurance, end of year
22,000
Insurance expense
18,000
Cash paid for new insurance policies
$18000 + $20000-$22000 =
$16000
Case 4
Income taxes payable, beginning of year
$85,000
Income taxes payable, end of year
103,000
Income tax expense
62,000
Cash payments for taxes
$62000 - $103000+$85000
= $17000
Case 1
Accounts receivable, beginning of year
$144,000
Accounts receivable, end of year
81,000
Credit sales for the year
167,000
Cash sales for the year
65,000
Write-offs of uncollectible accounts
32,000
Total cash collections for the year (from cash sales and collections on account)
$65,000 + $144000-$81000-32000
= $96000
Case 2
Inventory, beginning of year
$36,000
Inventory, end of year
68,000
Accounts payable, beginning of year
31,000
Accounts payable, end of year
19,000
Cost of goods sold
185,000
Cash payments for inventory (assume all purchases of inventory are on account)
$68000-$36000 = $32000
Case 3
Prepaid insurance, beginning of year
$20,000
Prepaid insurance, end of year
22,000
Insurance expense
18,000
Cash paid for new insurance policies
$18000 + $20000-$22000 =
$16000
Case 4
Income taxes payable, beginning of year
$85,000
Income taxes payable, end of year
103,000
Income tax expense
62,000
Cash payments for taxes
$62000 - $103000+$85000
= $17000
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