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?

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Related Book For  book-img-for-question

Intermediate Accounting IFRS

ISBN: 978-1119372936

3rd edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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