Question

Using the following information, you will need to answer the questions below.

Account	2019	2020
Inventory	46,700	42,100
General Expenses		8,200
Cost of Sales		116,200
Advertising Expense		6,500
Accounts Receivable	39,200	42,500
Wages Payable	6,200	7,800
Insurance Expense		8,000
Depreciation Expenses		15,900
Prepaid Advertising	900	1,200
Interest Income		9,700
Accounts Payable	21,400	18,700
Doubtful Debts Expense		5,200
Interest Expense		12,600
Interest Receivable	200	600
Tax Expense		16,900
Sales Income		263,800
Tax Payable	5,200	4,600
Interest Payable	2,800	3,100
Wages Expense		51,300
Prepaid Insurance	900	400

Required:

Answer the following questions (you must show your calculations for each answer):

1. Calculate the cash received from customers

2. Calculate the purchases figure

3. Calculate the cash paid for purchases

4. Calculate the cash paid for expenses

3. Calculate the cash received from interest income

4. Calculate the cash paid for interest expense

5. Calculate the cash paid for tax expense

Answer 1

a.	Cash Received From Customer
	Sales	$          263,800
	Less :Increase in Account Receivable	$             (3,300)	[=-(42500-39200)]
	Less: Doubtful Debts Expense	$             (5,200)
	Cash Received From Customer	$          255,300
	Bad debt expense is reduced based on assumption that these are already reduced from closing account receivables
b	Purchase figure
	Cost of Sales	$          116,200
	Less: Decrease in Inventory	$             (4,600)	[=42100-46700]
	Purchase figure	$          111,600
c	Cash Paid for purchases
	Purchase figure	$          111,600
	Add: Decrease in Account payable	$               2,700	[=-(18700-21400)]
	Cash Paid for purchases	$          114,300
d	Cash paid for expenses
	General Expenses	$               8,200
	Advertising Expense	$               6,500
	Insurance Expense	$               8,000
	Wages Expense	$            51,300
	Add: Increase in Prepaid Advertising	$                  300	[=1200-900]
	Less: Decrease in Prepaid Insurance	$                (500)	[=400-900]
	Less: Increase in Wages Payable	$             (1,600)	[=-(7800-6200)]
	Cash paid for expenses	$            72,200
e	Cash received from interest income
	Sales	$               9,700
	Less :Increase in Interest Receivable	$                (400)	[=-(600-200)]
	Cash received from interest income	$               9,300
f	Cash Paid for interest expense
	Income tax Expense	$            12,600
	Less : Increase in Interest payable	$                (300)	[=-(3100-2800)]
	Cash Paid for interest expense	$            12,300
g	Cash Paid for taxes expense
	Income tax Expense	$            16,900
	Add : Decrease in Tax payable	$                  600	[=-(4600-5200)]
	Cash Paid for taxes expense	$            17,500