The income statement of Larkspur Company is shown below LARKSPUR COMPANY INCOME

ID: 2586522 • Letter: T

Question

The income statement of Larkspur Company is shown below LARKSPUR COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $6,870,000 Cost of goods sold Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold $1,920,000 4,370,000 6,290,000 1,600,000 4,690,000 Gross profit Operating expenses 2,180,000 Selling expenses Administrative expenses 450,000 700,000 1,150,000 $1,030,000 Net income Additional information: 1. Accounts receivable decreased $400,000 during the year. 2. Prepaid expenses increased $160,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $260,000 during the year. 4. Accrued expenses payable decreased $110,000 during the year. 5. Administrative expenses include depreciation expense of $60,000.

Explanation / Answer

Cash Receipts

Sales revenue

$68,70,000

Add: Decrease in Accounts receivable

$4,00,000

Cash receipts from Sales

$72,70,000

Cash Payments

Purchases

$43,70,000

Add: Decease in Accounts payable

$2,60,000

Cash paid to suppliers

$46,30,000

Operating expenses:

Selling expenses

$4,50,000

Admin Expenses

$7,00,000

Decrease in Accrued expense

$1,10,000

Increase in Prepaid expenses

$1,60,000

$14,20,000

Less- Depreciation expense

$60,000

Cash paid for expenses

$13,60,000

Total cash payments

$59,90,000

Cash provided by operating activities

$12,80,000