E9-9A. Calculate cash from operating activities using the direct method. (LO 1,4)
The following information applies to Computer Company.
Income Statement for the Year Ended December 31,2007
|
Sales |
$ 20,000 |
|
Cost of goods sold |
(15,200) |
|
Gross margin |
4,800 |
|
Rent expense |
(1,000) |
|
Net income |
$ 3,800 |
1. Accounts receivable started the year with a balance of $1,000 and ended the year with a balance of $3,300
2. The beginning balance in accounts payable (to vendors) was 92,000, and the ending balance was zero. Inventory at the end of the year was the same as it was at the beginning of the year (i.e., there was no change in inventory).
3. The company started the year with $5,000 of prepaid rent and ended the year with $4,000 of prepaid rent.
Determine the following cash flows.
a. Cash collected from customers for sales during the year
b. Cash paid to vendors for inventory during the year
c. Cash paid for rent during the year