Question

Problem 17-04A (Video) Partially correct answer. Your answer is partially correct. Try again. The income statement of Whitlock Company is presented here. WHITLOCK COMPANY Income Statement For the Year Ended November 30, 2020 Sales revenue $7,700,000 Cost of goods sold Beginning inventory $1,900,000 Purchases 4,400,000 Goods available for sale 6,300,000 Ending inventory 1,400,000 Total cost of goods sold 4,900,000 Gross profit 2,800,000 Operating expenses 1,150,000 Net income $1,650,000 Additional information: 1. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $340,000 during the year. 4. Accrued expenses payable decreased $100,000 during the year. 5. Operating expenses include depreciation expense of $70,000. Prepare the operating activities section of the statement of cash flows using the direct method.

Answer 1

collected from customer: 7,500,000

paid to merchandise suppliers (4,740,000)

paid to operating expenses: (1,680,000)

cash provided by operating activities: 1,080,000

Step-by-step explanation:

beginning A/R + sales - ending A/R = sales collection

A/R increase by 200,000 thus ending is 200,000 greater than beginning:

end - beg = 200,000 so beg - ending = -200,000

7,700,000 - 200,000 = 7,500,000

beginning A/P + Purchases - ending A/P = payment to suppliers

account payable decrease by 340,000

beginnning - ending = 340,000

4,400,000 + 340,000 = 4,740,000

operating expense payment:

expenses for the year:

1,500,000 - 70,000 deepreciation + previous year expenses payment: 100,000 + payment on prepaid expenses 150,000 = 1,680,000