Ch.12 blems The following income statement along with additional year-end inform

ID: 2431937 • Letter: C

Question

Ch.12 blems The following income statement along with additional year-end information about changes in noncash current assets and curent liabilities are reported. SONAD COMPANY Income Statement Ended December 31 Cost of goods sold Gross profit $1,759,880 861,91e 897,e90 $240,983 42,216 ciation expe 5,277 19,349 355,318 7,836 548,888 Utilities expense Gain on sale of equipnent Net income Additional Year-End Balance Sheet Data Accounts receivable Inventory Accounts payable Salaries payable $32,150 increase 37,988 increase 13,125 decrease 3,580 decrease Next>

Explanation / Answer

SONAD COMPANY

Statement of Cash Flows (Partial)

For the Year ended December 31

Cash Flow from Operating Activities:

Cash Receipts From Customers

$ 1,726,850.00

Less-Cash Disbursements for

Suppliers

$ 912,935.00

Operating expenses

$ 311,325.00

$ 1,224,260.00

Net Cash Provided by Operating Activities

$ 502,590.00

Working note 1

Cash Receipts from Customers

Sales

$ 1,759,000.00

Less: Increase in Accounts Receivables

$ 32,150.00

Net Receipts from Customers

$ 1,726,850.00

Working note 2

Cash Disbursements supplier

Cost of Goods Sold

$ 861,910.00

Add: Increase in Inventory

$ 37,900.00

Purchases

$ 899,810.00

Add: Decrease in Accounts Payable

$ 13,125.00

Payments to Suppliers

$ 912,935.00

Working note 3

Payments for Operating expenses

Total Operating expenses

$ 355,318.00

Less: Non Cash Expenses (depreciation and Amortization)

$ 47,493.00

Cash Operating Expenses

$ 307,825.00

Add: Decrease in salary Payable

$ 3,500.00

Payment for Operating expenses

$ 311,325.00

Depreciation is a non cash expenses so it is deducted from operating expenses paid in cash. Similar treatment is done with Amortization expenses.

Profit on sale of Equipment is taken care of in Investing Activities where full sale price is recorded. Profit on sale is not considered in operating activities.