Accrual Verses Cash Flow The Water Fun Store is a retailer of water sports produ
ID: 2502169 • Letter: A
Question
Accrual Verses Cash Flow
The Water Fun Store is a retailer of water sports products forbackyard swimming pools. During August, the firm had the followingoperating activities:
August:.
1. Brought $5,000 of goodsfor resale from Pinetree Wholesalers on credit.
5. Paid $450 to the localnewspaper for advertising that ran during July.
6. Paid $975 rent for themonth of August.
9. Sold goods to customersfor $7,350 on credit. These goods had cost the firm $3,600.
10. Paid $3,000 to Pinetree Wholesalers inpartial payment for goods purchased August 1.
11. Collected $5,350 from goods sold onAugust 9.
13. Bought $9,200 of goods for resale fromStanley Company. Paid cash.
16. Paid employees for their work so farin August $1,050.
19. Sold goods to customers on credit for$6,350. These goods had cost the firm $2,400.
25. Collected $3,700 from the sales made onAugust 19.
29. Paid $975 rent for the month ofSeptember.
31. Employees had earned an additional $1,200of wages but would not be paid until September 1.
Required:
A. Prepare a report of net cashflow from operating activities.
B. Prepare an accrual basis incomestatement.
C. Which statement documents a morerealistic or complete picture of August activity? Why?
Explanation / Answer
Accrual Verses Cash Flow The Water Fun Store is a retailer of water sports produ