Converting cash flow numbers to accrual numbers and vice versa
Taylor Brothers began operations in 2011. The following selected information was extracted from its financial records:
|
2012 |
2011 |
|
|
Sales returns |
$25,000 |
$20,000 |
|
Cost of goods sold |
375,000 |
250,000 |
|
Inventory |
110,000 |
130,000 |
|
Accounts receivable |
150,000 |
95,000 |
|
Insurance expense |
50,000 |
35,000 |
|
Cash collected on sales |
500,000 |
350,000 |
|
Accounts payable |
115,000 |
105,000 |
|
Cash paid for insurance |
90,000 |
65,000 |
REQUIRED:
a. Compute gross sales (accrual basis) for 2011 and 2012.
b. Calculate the amount of cash paid to suppliers during 2012 for inventory.
c. Compute the balance in the prepaid insurance account as of December 31, 2011, and December 31, 2012.