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Administrative Studies
ADMS 2500
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Cash Flow Statement Practice ProblemsPRACTICE PROBLEM 1Victory Companys current year income statement contains the following dataSales760000 Cost of Goods Sold500000 Gross Profit on Sales260000Victorys comparative balance sheets show the following data accounts payable relate to merchandise purchasesEnd of BeginningYearof YearAccounts Receivable net43000 52000Inventory 110000 94000Prepaid Expenses70009000Accounts Payable31000 36000 a Compute Victorys current year cash received from customers and cash paid for merchandise purchasedb Assume Victorys income statement shows uncollectible accounts expense of 4000 Compute the current year cash received from customersPRACTICE PROBLEM 2The Lucky Company a sole proprietorship that owns no plant assets had the following income statement for the current year Lucky Company Income Statement For the Year Ended December 31 2005 Sales 440000 Cost of Goods Sold 300000 Gross Profit on Sales 140000 Operating ExpensesWages Expense60000 Rent Expense2400096000 Insurance Expense12000Net Income44000End of BeginningYearofYear Accounts Receivable48000 42000 Inventory60000 76000 Prepaid Insurance 6000 4000 Accounts Payable28000 16000 Wages Payable5000 8000 Use the preceding information to calculate the net cash flow from operating activities using the direct method
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