-Need some help with these, thanks- 1. Suppose the 2017 income statement for McD
ID: 2558673 • Letter: #
Question
-Need some help with these, thanks-
1. Suppose the 2017 income statement for McDonald’s Corporation shows cost of goods sold $5,607.0 million and operating expenses (including depreciation expense of $1,260.0 million) $11,316.0 million. The comparative balance sheets for the year shows that inventory decreased $5.3 million, prepaid expenses increased $38.7 million, accounts payable (merchandise suppliers) increased $14.7 million, and accrued expenses payable increased $212.0 million.
Using the direct method, compute (a) cash payments to suppliers and (b) cash payments for operating expenses.
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2.
Grouper Corp. completed its first year of operations on December 31, 2017. Its initial income statement showed that Grouper Corp. had sales revenue of $598,158 and operating expenses of $250,743. Accounts receivable and accounts payable at year-end were $181,260 and $69,483, respectively. Assume that accounts payable related to operating expenses. Ignore income taxes.
Compute net cash provided (used) by operating activity using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Explanation / Answer
1) Cash payment to supplier = (5607-5.3-14.7) = 5587 million
Cash payment for operation expenses = (11316-1260+38.70-212) = 9882.70 million
2) Cash flow from operating activity :
Cash from sales (598158-181260) 416898 Cash paid for expense (250743-69483) (181260) Net cash provided (used) by operating activity 235638Related Questions
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