Question

In: Accounting

Blossom Co. reports revenues of $201,000 and operating expenses of $109,000 in its first year of...

Blossom Co. reports revenues of $201,000 and operating expenses of $109,000 in its first year of operations, 2017. Accounts receivable and accounts payable at year-end were $71,500 and $28,800, respectively. Assume that the accounts payable related to operating expenses. (Ignore income taxes.)

Using the direct method, compute net cash provided (used) by operating activities. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Net cash

usedprovided

by operating activities
$


Situation B:
The income statement for Blue Traveler Company shows cost of goods sold $308,100 and operating expenses (exclusive of depreciation) $231,000. The comparative balance sheet for the year shows that inventory increased $26,100, prepaid expenses decreased $8,100, accounts payable (related to merchandise) decreased $17,000, and accrued expenses payable increased $11,000.

Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.

(a) Cash payments to suppliers $
(b) Cash payments for operating expenses $

Solutions

Expert Solution

Answer to Question 1:

Cash received from customers = Revenues - Ending accounts receivable
Cash received from customers = $201,000 - $71,500
Cash received from customers = $129,500

Cash payments to suppliers = Operating expenses - Ending accounts payable
Cash payments to suppliers = $109,000 - $28,800
Cash payments to suppliers = $80,200

Net cash provided by operating activities = Cash received from customers - Cash payments to suppliers
Net cash provided by operating activities = $129,500 - $80,200
Net cash provided by operating activities = $49,300

Answer to Question 2:

Cash payments to suppliers = Cost of goods sold + Increase in inventory + Decrease in accounts payable
Cash payments to suppliers = $308,100 + $26,100 + $17,000
Cash payments to suppliers = $351,200

Cash payments for operating expenses = Operating expenses - Decrease in prepaid expenses - Increase in accrued expenses payable
Cash payments for operating expenses = $231,000 - $8,100 - $11,000
Cash payments for operating expenses = $211,900


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