
Concept explainers
a.
Determine the amount of cash paid for merchandise.
a.

Answer to Problem 21E
Therefore, the amount of cash paid for merchandise is $1,025,800.
Explanation of Solution
Statement of
Direct method: This method uses the basis of cash for preparing the cash flows statement.
Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.
Cash Receipts: It encompasses all the cash receipts from sale of goods and on
Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.
The below table shows the way of calculation of cash flows from operating activities:
Cash flows from operating activities (Direct method) |
Add: Cash receipts. |
Cash receipt from customer |
Less: Cash payments: |
To supplier |
For operating expenses |
Income tax expenses |
Net cash provided from or used by operating activities |
Working notes:
Calculate increase or decrease in merchandise inventories:
Calculate increase or decrease in accounts payable:
Cash payments for purchase represents the total amount of cash paid for the purchase as well as to the accounts payable.
Therefore, the amount of cash paid for merchandise is $1,025,800.
b.
Determine the amount of cash paid for operating expenses.
b.

Answer to Problem 21E
Therefore, the amount of cash paid for operating expenses is $179,170.
Explanation of Solution
Working note:
Calculate increase or decrease in operating expenses / accrued expense payable:
Calculate increase or decrease in prepaid expenses:
Cash payments for accrued expense represent the total amount of cash paid for the operating expense, accrued expense payable and prepaid expenses.
Therefore, the amount of cash paid for operating expenses is $179,170.
Want to see more full solutions like this?
Chapter 16 Solutions
Financial Accounting
- Direct materials:135, Direct labor:105arrow_forwardRodriguez Manufacturing reported a net income of $735,000 based on variable costing. Beginning and ending inventories were 47,800 units and 50,300 units, respectively. The fixed manufacturing overhead per unit was $1.40 for both the beginning and ending inventories. What is net income under absorption costing?arrow_forwardTotal gross margin?arrow_forward
- What is the fixed cost per month on these general accounting question?arrow_forwardHiarrow_forwardNatalie Systems had assets of $310,000 and liabilities of $165,000 at the beginning of the year. During the year, revenues were $158,000 and expenses were $102,000. Also, during the year the business paid the owners a dividend of $6,000, and assets increased by $18,000. What were Natalie's total liabilities at the end of the year? Helparrow_forward
- Compute the manufacturing overhead rate for the year.arrow_forwardPortman Solutions paid out $42.5 million in total common dividends and reported $150.3 million of retained earnings at year-end. The prior year's retained earnings were $104.8 million. Assume that all dividends declared were actually paid. What was the net income for the year?arrow_forwardPlease need help with this general accounting questionarrow_forward
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub





