Treece, Inc. Revenue Net Sales 2,850,000 Dividend income 104,000 Interest Income

Question

Treece, Inc.

Revenue
Net Sales 2,850,000
Dividend income 104,000
Interest Income 70,000
Gain on sales of marketable securities 4,000
Total revenue and gains 3,028,000

Cost and Expenses:
Cost of goods sold 1,550,000
Operating expenses 980,000
Interest expenses 185,000
Interest tax expense 90,000
Total costs and expenses 2,805,000
Net Income 223,000

End of Year Beginning of Year
Selected account balances
Account receivealbe 650000 720,000
Accruced interest received 9000 6,000
Inventories 800000 765,000
Short-term prepayments 20000 15,000
Accounts payable (merchandise suppliers) 570000 562,000
Accrued operating expenses payable 65000 94,000
Accrued interest payable 21000 12,000
Accrued income taxes payable 22000 35,000

Explanation / Answer

Treece,  Inc.

Income Statement

Cash flow from operating  activities:

Cash received from customers(a)

2920000

Interest and dividends  received(b)

171000

Cash provided by operating  activities

3091000

Cash paid to suppliers and  employees(c)

(2476000)

Interest paid(d)

(176000)

Income taxes paid(e)

(103000)

Cash disbursed by operating  activities

(2755000)

Net cash provided by operating  activities

336000

Supporting  Computations:

a) Cash received from  customers

Net Sales

2850000

Add: Decrease in account  receivable

70000

Cash received from customers

2920000

b) Interest and dividends  received

Dividends

104000

Interest income

70000

Less: increase in accrued  interest receivable

3000

Interest and dividends  received

171000

c) Cash paid to suppliers and  employees

Cash paid to suppliers:

Cost of goods sold

1550000

Add: increase in inventories

35000

Less: increase in account  payable

8000

Cash paid to suppliers

1577000

Cash paid to employees  (operating expenses):

Operating expenses

980000

Add: increase in short-term  prepayments

5000

Add: decrease in operating  expenses payable

29000

Less: Depreciation expense

115000

Cash used in operating expense

899000

Cash paid to suppliers and  employees

2476000

d)  Interest paid

Interest expense

185000

Less: increase in accrued  interest payable

9000

Interest paid

176000

e) Income taxes paid

Income tax expense

90000

Add: decrease in income taxes  payable

13000

Income taxes paid

103000

Treece,  Inc.

Income Statement

Cash flow from operating  activities:

Cash received from customers(a)

2920000

Interest and dividends  received(b)

171000

Cash provided by operating  activities

3091000

Cash paid to suppliers and  employees(c)

(2476000)

Interest paid(d)

(176000)

Income taxes paid(e)

(103000)

Cash disbursed by operating  activities

(2755000)

Net cash provided by operating  activities

336000

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