Financial Statement Effects of Accounts Payable Transactions Petroni Company engages in the following sequence of transactions every month: 1. Purchases $300 of inventory on credit. 2. Sells $300 of inventory for $420 on credit. 3. Pays other operating expenses of $110 in cash. 4. Collects $420 in cash from customers. 5. Pays supplier of inventory $300.

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 months 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