Reference no: EM13508522

Present below are two independent situations.

Situation A:

Chenowith Co. reports revenue of $194,340 and operating expenses of $112,340 in its first year of operations, 2012. Accounts receivable and accounts payable at year-end were $78,680 and $40,480, respectively. Assume that the accounts payable related to operating expenses. Ignore income taxes.

Instructions:

Using the direct method, compute net cash provided (used) by operating activities. (If an amount reduces the account balance then enter with negative sign.)

Situation B:

The income statement for Edgebrook Company shows cost of goods sold $305,400 and operating expenses (exclusive of depreciation) $227,830. The comparative balance sheet for the year shows that inventory increased $21,810, prepaid expenses decreased $7,650, accounts payable (related to merchandise) decreased $15,190, and accrued expenses payable increased $13,590.

Instructions

Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.