Presented below are two independent situations. Situation A: Chenowith AG reports revenues of 200,000 and operating expenses
Question:
Presented below are two independent situations.
Situation A: Chenowith AG reports revenues of €200,000 and operating expenses of €110,000 in its first year of operations, 2019. Accounts receivable and accounts payable at year-end were €71,000 and €39,000, respectively. Assume that the accounts payable related to operating expenses. (Ignore income taxes.)
Instructions
Using the direct method, compute net cash provided (used) by operating activities.
Situation B: The income statement for Edgebrook SA shows cost of goods sold €310,000 and operating expenses (exclusive of depreciation) €230,000. The comparative statements of financial position for the year show that inventory increased €21,000, prepaid expenses decreased €8,000, accounts payable (related to merchandise) decreased €17,000, and accrued expenses payable increased €11,000.
Instructions
Compute
(a) Cash payments to suppliers and
(b) Cash payments for operating expenses?
Step by Step Answer:
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield