(Learning Objective 1: Linking accrual accounting and cash fl ows) Labear Corporation earned revenues of $41 million during 20X7 and ended the year with net income of $5 million.

During 20X7, Labear collected $23 million from customers and paid cash for all of its expenses plus an additional $5 million for amounts payable at December 31, 20X6. Answer these questions about Labear’s operating results, fi nancial position, and cash fl ows during 20X7:

❙ Requirements 1. How much were Labear’s total expenses? Show your work.

2. Identify all the items that Labear will report on its 20X7 income statement. Show each amount.

3. Labear began 20X7 with receivables of $4 million. All sales are on account. What was the company’s receivables balance at the end of 20X7? Identify the appropriate fi nancial statement, and show how Labear will report ending receivables in its 20X7 annual report.

4. Labear began 20X7 owing accounts payable of $8 million. All expenses are incurred on account. During 20X7 Labear paid $41 million on account. How much in accounts payable did the company owe at the end of 20X7? Identify the appropriate fi nancial statement and show how Labear will report accounts payable in its 20X7 annual report.