1. Calculate the amount of cash paid for income taxes reported by Betty DeRose,

Question

1. Calculate the amount of cash paid for income taxes reported by Betty DeRose, Inc.in its 2017 statement of cash flows.

2. Calculate the amount of cash paid for rent reported by Betty DeRose, Inc. in its2017 statement of cash flows.

3. Calculate the amount of cash paid to suppliers for purchases of inventory reported byBetty DeRose, Inc. in its 2017 statement of cash flows.

4. Calculate the net cash flow from investing activities for 2017.

5. Calculate the net cash flow from financing activities for 2017.

6. Calculate the amount of cash collections from customers reported by Betty DeRose, Inc. in its 2017 statement of cash flows.

Explanation / Answer

1) Cash paid for income taxes Tax payable January 1, 2017 18000 Add : Tax expenses for the year 25000 Less : tax payable December 31, 2017 30000 Cash paid for income taxes 13000 2) Cash paid for rent Prepaid rent December 31, 2017 21000 Add : Rent expense for the year 29000 Less : Prepaid rent January 1, 2017 19000 Cash paid for rent 31000 3) Cash paid to suppliers for purchase of inventory Cost of goods sold = opening stock + Purchases - closing stock Hence, Purchases = cost of goods sold - opening stock + closing stock                       = 293000 - 54000 + 89000                       = 328000 Accounts payable, January 1 2017 29000 Add : Current purchases 328000 Less : accounts payable December 31, 2017 22000 Cash paid to suppliers for purchase of inventory 335000 4) Net Cash flow from Investing activity Purchase of land Land as on December 31, 2017 84000 Less : Land as on January 1. 2017 66000 Add : Gain on sale of land 16000 Net Purchase of land 34000 Purchase of equipment Equipment as on December 31, 2017 98000 Less : equipment as on January 1 , 2017 83000 Purchase of equipment 15000 Cash flow from investing activity Net Purchase of land 34000 Purchase of equipment 15000 Net Cash outflow from investing activity 49000 5) Cash flow from financing activity Common stock December 31, 2017 80000 Less : Common stock January 1, 2017 70000 Issuance of common stock 10000 Net cash inflow from financing activity 10000 6) Cash collection from customers Accounts receivable January 1 2017 39000 Add : Sales revenue 400000 Less : Accounts receivable December 31, 2017 26000 Cash collection from customers 413000

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