Question

The income statement for Splish Traveler Company shows cost of goods sold $307,000 and operating expenses (exclusive of depreciation) $229,000. The comparative balance sheet for the year shows that inventory increased $25,800, prepaid expenses decreased $8,000, accounts payable (related to merchandise) decreased $16,900, and accrued expenses payable increased $11,100.
Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.

(a) Cash payments to suppliers $


(b) Cash payments for operating expenses $

Answer 1

Answer:

a. $349,700

b. $209,900

Explanation:

The computation is shown below:

Before computing the cash payment made to supplier first we have to find out the purchase amount which is shown below:

(a) Change in Finished goods + purchase = Cost of goods sold

-$25,800 + purchases = $307,000

So, the purchase is $332,800

Now

Cash paid to supplier is

= $332,800 + $16,900

= $349,700

And,

(b) Cash paid for operating expenses is

= $229,000 - $8,000 - $11,100

= $209,900