Question

Information related to various financial statement elements is provided for two cases:

Case A Operating expenses were $500,000. Inventory increased by $72,000, accounts payable increased by $50,000, and prepaid rent decreased by $16,000.

Case B Sales revenue was $1,350,000. Accounts receivable decreased by $75,000 and unearned revenue increased by $46,000 during the year.

 

Required:

For each case, calculate the cash inflow or outflow related to the revenue or expense account.

Answer 1

Operating activities – net earnings.......................................................................  $ 280,000

 

Financing activities – repayment of notes payable

       ($700,000 + $140,000 versus $450,000)......................................................      (390,000)

 

Financing activities - cash received for common shares ...................................      70,000

 

Financing activities - cash paid for dividends

       ($540,000 + $280,000 versus $610,000)......................................................      (210,000)

 

Disclosure note: non-cash long-term note payable for machinery = $140,000

Disclosure note: non-cash long-term note payable for machinery = $140,000