(Learning Objective 1: Linking accrual accounting and cash fl ows) Gauge Corporation earned revenues of €33 million during 20X6 and ended the year with net income of €6 million. During 20X6, Gauge collected cash of €24 million from customers and paid cash for all of its expenses plus an additional €1 million on account for amounts payable at December 31, 20X5. Answer these questions about Gauge’s operating results, fi nancial position, and cash fl ows during 20X6:

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

2. Identify all the items that Gauge will report on its 20X6 income statement. Show each amount.

3. Gauge began 20X6 with receivables of €9 million. All sales are on account. What was Gauge’s receivables balance at the end of 20X6? Identify the appropriate fi nancial statement and show how Gauge will report its ending receivables balance in its 20X6 annual report.

4. Gauge began 20X6 owing accounts payable of €11 million. All expenses are incurred on account. During 20X6, Gauge paid €28 million on account. How much in accounts payable did Gauge owe at the end of 20X6? Identify the appropriate fi nancial statement and show how Gauge will report accounts payable in its 20X6 annual report.