Melissa, Inc. reported the following income statement, prepared on the accrual basis: Sales$ 6,000Cost of goods sold (4,700)Gross profit$ 1,300Operating expenses:Depreciation expense$190Other operating expenses650 (840)Income before taxes$ 460Income tax expense (210)Net income$ 250Changes during the year in selected accounts:Accounts receivable$100 decreaseInventories200 decreaseAccounts payable (on purchases)150 increase Required:For Melissa, Inc., compute the cash flow pertaining to:a.Cash collections from customers.b.Cash paid for operating expenses.c.Cash paid for suppliers.

Formula: Cash collections from customers = Sales + Decrease in accounts receivables Sum of both…

Answered: Melissa, Inc. reported the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Melissa, Inc. reported the following income statement, prepared on the accrual basis:

Sales		$ 6,000
Cost of goods sold		(4,700)
Gross profit		$ 1,300
Operating expenses:
	Depreciation expense	$190
	Other operating expenses	650	(840)
Income before taxes		$ 460
Income tax expense		(210)
Net income		$ 250

Changes during the year in selected accounts:
Accounts receivable	$100 decrease
Inventories	200 decrease
Accounts payable (on purchases)	150 increase

Required:
For Melissa, Inc., compute the cash flow pertaining to:

Cash collections from customers.

Cash paid for operating expenses.

Cash paid for suppliers.

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