Question

Chakravarthy Company's current year income statement reports the following: Sales $1,031,250 Cost of goods sold 687,500 Gross profit $343,750 Chakravarthy's comparative balance sheets show the following (accounts payable relate to merchandise purchases): End of Year Beg. of Year Accounts receivable $88,750 $75,000 Inventory 136,250 120,000 Accounts payable 38,750 46,250 Compute Chakravarthy's current-year cash received from customers and cash paid for merchandise purchased. Cash received from customers Answer Cash paid for merchandise Answer

Answer 1

Answer and Explanation:

The computation is shown below;

For cash received from customers

Sales $1,031,250

Add:- Beginning accounts receivable $75,000

Less :- Ending accounts receivable ($88,750)

Cash received from customers $1,017,500

For cash paid for merchandise purchased

Cost of goods sold $687,500

Add:- Ending Merchandise inventory $136,250

Less:- Beginning Merchandise inventory ($120,000)

Purchase $703,750

Add :- Beginning accounts payable $46,250

Less:- Ending accounts payable ($38,750)

Cash paid for merchandise purchased $711,250

We simply applied the above format