Question

1. Martinez Corporation had January 1 and December 31 balances as follows. 1/1/17 12/31/17 Inventory $78,000...

1. Martinez Corporation had January 1 and December 31 balances as follows. 1/1/17 12/31/17 Inventory $78,000 $93,000 Accounts payable 59,000 66,000 For 2017, cost of goods sold was $486,000. Compute Martinez’s 2017 cash payments to suppliers.

Cash payments to suppliers $

2. In 2017, Grouper Corporation had net cash provided by operating activities of $552,000, net cash used by investing activities of $1,057,000, and net cash provided by financing activities of $573,000. At January 1, 2017, the cash balance was $328,000.

Compute December 31, 2017, cash.

Cash, December 31, 2017 $

3.

Sage Corporation had the following 2017 income statement.

Revenues

$90,000
Expenses

62,000

$28,000


In 2017, Sage had the following activity in selected accounts.

Accounts Receivable
1/1/17 22,000
Revenues 90,000
12/31/17 24,900
Write-offs 1,100
Collections 86,000

Allowance for Doubtful Accounts
Write-offs 1,100
1/1/17 1,100
Bad debt expense 1,800
12/31/17 1,800


(a) Prepare Sage’s cash flows from operating activities section of the statement of cash flows using the direct method.

Sage Corporation
Statement of Cash Flows-Direct Method (Partial)

December 31, 2017For the Year Ended December 31, 2017For the Quarter Ended December 31, 2017

Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash

    Decrease in Net Accounts Receivable    Increase in Net Accounts Receivable    Net Income    Cash Received from Customers    Cash Payments for Expenses    

 $

    Decrease in Net Accounts Receivable    Cash Received from Customers    Cash Payments for Expenses    Net Income    Increase in Net Accounts Receivable    

    Cash at Beginning of Period    Cash at End of Period    Cash Flows from Financing Activities    Cash Flows from Investing Activities    Cash Flows from Operating Activities    Net Cash Provided by Financing Activities    Net Cash Provided by Investing Activities    Net Cash Provided by Operating Activities    Net Cash Used by Financing Activities    Net Cash Used by Investing Activities    Net Cash Used by Operating Activities    Net Decrease in Cash    Net Increase in Cash    

 $


(b) Prepare Sage’s cash flows from operating activities section of the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Sage Corporation
Statement of Cash Flows-Indirect Method (Partial)

December 31, 2017For the Year Ended December 31, 2017For the Quarter Ended December 31, 2017

Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash

    Cash Payments for Expenses    Decrease in Net Accounts Receivable    Increase in Net Accounts Receivable    Net Income    Cash Received from Customers    

 $

    Cash Payments for Expenses    Net Income    Decrease in Net Accounts Receivable    Increase in Net Accounts Receivable    Cash Received from Customers    

    Cash at Beginning of Period    Cash at End of Period    Cash Flows from Financing Activities    Cash Flows from Investing Activities    Cash Flows from Operating Activities    Net Cash Provided by Financing Activities    Net Cash Provided by Investing Activities    Net Cash Provided by Operating Activities    Net Cash Used by Financing Activities    Net Cash Used by Investing Activities    Net Cash Used by Operating Activities    Net Decrease in Cash    Net Increase in Cash    

 $
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Homework Answers

Answer #1

Answer to Question 1:

Cost of inventory purchased = Ending inventory + Cost of goods sold - Beginning inventory
Cost of inventory purchased = $93,000 + $486,000 - $78,000
Cost of inventory purchased = $501,000

Cash payments to suppliers = Beginning accounts payable + Cost of inventory purchased - Ending accounts payable
Cash payments to suppliers = $59,000 + $501,000 - $66,000
Cash payments to suppliers = $494,000

Answer to Question 2:

Net increase in cash = Net cash provided by operating activities - Net cash used by investing activities + Net cash provided by financing activities
Net increase in cash = $552,000 - $1,057,000 + $573,000
Net increase in cash = $68,000

Net increase in cash = Cash, December 31, 2017 - Cash, January 1, 2017
$68,000 = Cash, December 31, 2017 - $328,000
Cash, December 31, 2017 = $396,000

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