Ex 3: Aircon Ltd. Reported the following net income on its income statement for
ID: 2520229 • Letter: E
Question
Ex 3:
Aircon Ltd. Reported the following net income on its income statement for the month ended April 30, 2018:
Aircon Ltd.
Income Statement
Month Ended April 30, 2018
Sales revenue $ 35,700
Cost of goods sold 12,500
Gross profit 23,200
Operating expenses
Salaries expense $ 5,200
Administrative expenses 890
Depreciation expense 1,200 7,290
Income from operations 15,910
Interest expense 545
Income before income tax 15,365
Income tax expense 3,025
Net income $ 12,340
During the month, Aircon’s accounts receivable increased by $1,350 and accounts payable increased by $245. The company also received payments for unearned revenue of $250. Merchandise inventory decreased by $1,345. Administrative costs reported on the income statement do not include prepaid expenses of $450. Income taxes payable increased in total by $3,025. The company has no other accrued liabilities. Aircon uses the direct method when preparing the statement of cash flows.
Based on the above information, identify all of the following statements that are correct:
(a) Net cash provided by operating activities is $16,605.
(b) Cash receipts from customers is $34,350.
(c) Cash payments for interest are $545.
(d) Cash payments for operating expenses are $6,090.
(e) Cash payments to suppliers is $11,360.
(f) Cash payments to suppliers is $10,910.
(g) Cash payments for income tax are zero.
(h) Net cash provided by operating activities is $16,355
Explanation / Answer
Cash flow from operating activities Cash collection from customer 34600 (35700-1350+250) Cash payments Payment to suppliers -10910 (12500-1345-245) Payment to operating expense -6540 (5200+890+450) Income tax paid 0 Interest expense -545 Total cash payments -17995 Cash cash provided from operating activities 16605
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