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Financial Statement Effects of Accounts Payable Transactions Petroni Company engages in the following sequence of transactions every month: 1. Purchases $500 of inventory on credit.

Financial Statement Effects of Accounts Payable Transactions

Petroni Company engages in the following sequence of transactions every month: 1. Purchases $500 of inventory on credit. 2. Sells $500 of inventory for $640 on credit. 3. Pays other operating expenses of $125 in cash. 4. Collects $640 in cash from customers. 5. Pays supplier of inventory $500.

a. Create a monthly income statement and statement of operating cash flow (direct method) for four consecutive months.

Do not use negative signs with any of your answers below.

1 2 3 4
Income statement:
Revenue $Answer

$Answer

$Answer

$Answer

Cost of goods sold Answer

Answer

Answer

Answer

Operating expenses Answer

Answer

Answer

Answer

Income $Answer

$Answer

$Answer

$Answer

Operating cash flows
Receipts $Answer

$Answer

$Answer

$Answer

Payments to suppliers Answer

Answer

Answer

Answer

Payments for operating expenses Answer

Answer

Answer

Answer

Net cash flow from operations $Answer

$Answer

$Answer

$Answer

b. The CFO is disappointed with the cash flows from the business. They do not provide the support for investment and growth that she wants. She proposes delaying supplier payments by a month. That is, each month's inventory purchase will be paid for in the following month. How would this change the monthly income statements and operating cash flows in part a?

Do not use negative signs with any of your answers below.

1 2 3 4
Income statement:
Revenue $Answer

$Answer

$Answer

$Answer

Cost of goods sold Answer

Answer

Answer

Answer

Operating expenses Answer

Answer

Answer

Answer

Income $Answer

$Answer

$Answer

$Answer

Operating cash flows
Receipts $Answer

$Answer

$Answer

$Answer

Payments to suppliers Answer

Answer

Answer

Answer

Payments for operating expenses Answer

Answer

Answer

Answer

Net cash flow from operations $Answer

$Answer

$Answer

$Answer

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