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7 May, 21:30

The following selected account balances appeared on the financial statements of the Washington Company:

Accounts Receivable, Jan. 1 $13,000

Accounts Receivable, Dec. 31 9,000

Accounts Payable, Jan 1 4,000

Accounts Payable Dec. 31 7,000

Merchandise Inventory, Jan 1 10,000

Merchandise Inventory, Dec. 31 15,000

Sales 56,000

Cost of Goods Sold 31,000

Question:

Cash Collections from customers are?

Cash paid to suppliers is?

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Answers (1)
  1. 7 May, 22:24
    0
    Cash Collections from customers = $60,000

    Cash paid to suppliers = $33,000

    Explanation:

    Given:

    Accounts Receivable, Jan 1 = $13,000

    Accounts Receivable, Dec 31 = $9,000

    Accounts Payable, Jan 1 = $4,000

    Accounts Payable Dec. 31 = $7,000

    Merchandise Inventory, Jan 1 = $10,000

    Merchandise Inventory, Dec. 31 = $15,000

    Sales = $56,000

    Cost of Goods Sold = $31,000

    Now,

    Cash Collections from customers

    = Accounts Receivable, Jan 1 + Sales - Accounts Receivable, Dec. 31

    = $13,000 + $56,000 - $9,000

    = $60,000

    also,

    Purchase

    = Merchandise Inventory, Dec. 31 + Cost of Goods Sold - Merchandise Inventory, Jan 1

    = $15,000 + $31,000 - $10,000

    = $36,000

    and,

    Cash paid to suppliers

    = Accounts Payable, Jan 1 + Purchase - Accounts Payable Dec. 31

    = $4,000 + $36,000 - $7,000

    = $33,000
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