51) Cash collected from customers can be computed by the following formula:<\/p>\n\n\n\n
A) ending accounts receivable plus beginning accounts receivable minus sales<\/p>\n\n\n\n
B) ending accounts receivable minus beginning accounts receivable plus sales<\/p>\n\n\n\n
C) beginning accounts receivable minus ending accounts receivable plus sales<\/p>\n\n\n\n
D) beginning accounts receivable minus ending accounts receivable minus sales<\/p>\n\n\n\n
52) Fertilizer Incorporated reports an increase in Accounts Payable of $9,200 and an increase in inventory of $45,000 for the current year. Accounts Payable relates solely to the purchase of merchandise. Sales on account were $532,100 and cost of goods sold was $358,000. The payments to suppliers for inventory during the period were:<\/p>\n\n\n\n
A) $393,800<\/p>\n\n\n\n
B) $322,200<\/p>\n\n\n\n
C) $412,200<\/p>\n\n\n\n
D) $303,800<\/p>\n\n\n\n
53) Given the following information for Rat Rack Corporation: cost of goods sold $35,500, sales $65,000, increase in accounts receivables $4,200. Their receipts from customers total would be:<\/p>\n\n\n\n
A) $60,800<\/p>\n\n\n\n
B) $69,200<\/p>\n\n\n\n
C) $33,700<\/p>\n\n\n\n
D) $25,300<\/p>\n\n\n\n
54) In 2010, Nutrient Company reported sales of $725,000 and cost of goods sold of $480,000. During 2010, Nutrient’s Inventory account increased $25,000 and its Accounts Payable account (which relates solely to the purchase of merchandise) decreased $18,000. Nutrient Company’s payments to suppliers for inventory during 2010 were:<\/p>\n\n\n\n
A) $437,000<\/p>\n\n\n\n
B) $523,000<\/p>\n\n\n\n
C) $487,000<\/p>\n\n\n\n
D) $473,000<\/p>\n\n\n\n
55) Geographic Enterprise’s Inventory account decreased $37,500 and its Accounts Payable account (which relates solely to the purchase of merchandise) decreased $13,760 during the year. Geographic also reported sales of $856,000 and cost of goods sold of $597,600 during the same period. Geographic’s payments to suppliers for inventory during the year were:<\/p>\n\n\n\n
A) $621,340<\/p>\n\n\n\n
B) $573,860<\/p>\n\n\n\n
C) $805,740<\/p>\n\n\n\n
D) $648,860<\/p>\n\n\n\n
56) Salary Expense on the income statement was $264,780 for the year ended December 31, 2010. The Salary Payable account decreased $24,370 during the same period. The amount of cash payments to employees for the year ended December 31, 2010, is:<\/p>\n\n\n\n
A) $289,150<\/p>\n\n\n\n
B) $264,780<\/p>\n\n\n\n
C) $240,410<\/p>\n\n\n\n
D) indeterminable from the information given<\/p>\n\n\n\n
57) The amounts in the Salaries Payable account for Ammonia Company were $14,500 and $16,000 on December 31, 2010, and December 31, 2011, respectively. Cash paid to employees for the years ended December 31, 2010, and December 31, 2011, were $255,000 and $280,000, respectively. Ammonia Company’s Salary Expense for the year ended December 31, 2011, was:<\/p>\n\n\n\n
A) $253,500<\/p>\n\n\n\n
B) $281,500<\/p>\n\n\n\n
C) $278,500<\/p>\n\n\n\n
D) $256,500<\/p>\n\n\n\n
58) Nitrogen Company reported Insurance Expense for the year ended December 31, 2010, of $37,490. During the same period, the Prepaid Insurance account decreased $4,610. The payments for insurance during the year ended December 31, 2010, were:<\/p>\n\n\n\n
A) $32,880<\/p>\n\n\n\n
B) $37,490<\/p>\n\n\n\n
C) $42,100<\/p>\n\n\n\n
D) $46,710<\/p>\n\n\n\n
59) On January 1, 2010, Prepaid Insurance had a balance of $6,700 and on December 31, 2010, a balance of $8,320. The income statement for the year reported Insurance Expense of $49,310. Payments for insurance during the year amounted to:<\/p>\n\n\n\n
A) $49,310<\/p>\n\n\n\n
B) $47,690<\/p>\n\n\n\n
C) $50,930<\/p>\n\n\n\n
D) $57,630<\/p>\n\n\n\n
60) All of the following would appear on a direct method cash flow statement except:<\/p>\n\n\n\n
A) cash payments for interest and taxes<\/p>\n\n\n\n
B) cash purchase of equipment<\/p>\n\n\n\n
C) cash receipts from customers<\/p>\n\n\n\n
D) net income<\/p>\n\n\n\n
The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n Here are the correct answers and explanations for each question:<\/p>\n\n\n\n 51) Cash collected from customers can be computed by the formula:<\/strong> Explanation:<\/strong> 52) Payments to suppliers for inventory during the period were:<\/strong> Calculation:<\/strong> 53) Receipts from customers total:<\/strong> Calculation:<\/strong> 54) Payments to suppliers for inventory during 2010 were:<\/strong> Calculation:<\/strong> 55) Payments to suppliers for inventory during the year were:<\/strong> Calculation:<\/strong> 56) Cash payments to employees:<\/strong> Calculation:<\/strong> 57) Salary Expense for the year ended December 31, 2011:<\/strong> Calculation:<\/strong> 58) Payments for insurance during 2010:<\/strong> Calculation:<\/strong> 59) Payments for insurance during the year:<\/strong> Calculation:<\/strong> 60) All of the following would appear on a direct method cash flow statement except:<\/strong> Explanation:<\/strong> 51) Cash collected from customers can be computed by the following formula: A) ending accounts receivable plus beginning accounts receivable minus sales B) ending accounts receivable minus beginning accounts receivable plus sales C) beginning accounts receivable minus ending accounts receivable plus sales D) beginning accounts receivable minus ending accounts receivable minus sales 52) Fertilizer Incorporated 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\n\n\n\n
Answer: C) beginning accounts receivable minus ending accounts receivable plus sales<\/strong><\/p>\n\n\n\n
The formula adjusts sales for changes in accounts receivable. If accounts receivable increases, less cash was collected than the sales reported. If accounts receivable decreases, more cash was collected than sales.<\/p>\n\n\n\n
\n\n\n\n
Answer: C) $412,200<\/strong><\/p>\n\n\n\n
Cost of Goods Sold = $358,000
Increase in Inventory = $45,000
Increase in Accounts Payable = $9,200
Payments = Cost of Goods Sold + Inventory Increase – Accounts Payable Increase
Payments = $358,000 + $45,000 – $9,200 = $412,200<\/p>\n\n\n\n
\n\n\n\n
Answer: A) $60,800<\/strong><\/p>\n\n\n\n
Sales = $65,000
Increase in Accounts Receivable = $4,200
Receipts = Sales – Increase in Accounts Receivable
Receipts = $65,000 – $4,200 = $60,800<\/p>\n\n\n\n
\n\n\n\n
Answer: B) $523,000<\/strong><\/p>\n\n\n\n
Cost of Goods Sold = $480,000
Inventory Increase = $25,000
Accounts Payable Decrease = $18,000
Payments = Cost of Goods Sold + Inventory Increase + Accounts Payable Decrease
Payments = $480,000 + $25,000 + $18,000 = $523,000<\/p>\n\n\n\n
\n\n\n\n
Answer: A) $621,340<\/strong><\/p>\n\n\n\n
Cost of Goods Sold = $597,600
Inventory Decrease = $37,500
Accounts Payable Decrease = $13,760
Payments = Cost of Goods Sold – Inventory Decrease + Accounts Payable Decrease
Payments = $597,600 – $37,500 + $13,760 = $621,340<\/p>\n\n\n\n
\n\n\n\n
Answer: A) $289,150<\/strong><\/p>\n\n\n\n
Salary Expense = $264,780
Salary Payable Decrease = $24,370
Payments = Salary Expense + Salary Payable Decrease
Payments = $264,780 + $24,370 = $289,150<\/p>\n\n\n\n
\n\n\n\n
Answer: B) $281,500<\/strong><\/p>\n\n\n\n
Cash Paid = $280,000
Increase in Salaries Payable = $16,000 – $14,500 = $1,500
Salary Expense = Cash Paid + Increase in Salaries Payable
Salary Expense = $280,000 + $1,500 = $281,500<\/p>\n\n\n\n
\n\n\n\n
Answer: C) $42,100<\/strong><\/p>\n\n\n\n
Insurance Expense = $37,490
Prepaid Insurance Decrease = $4,610
Payments = Insurance Expense + Prepaid Insurance Decrease
Payments = $37,490 + $4,610 = $42,100<\/p>\n\n\n\n
\n\n\n\n
Answer: C) $50,930<\/strong><\/p>\n\n\n\n
Insurance Expense = $49,310
Prepaid Insurance Increase = $8,320 – $6,700 = $1,620
Payments = Insurance Expense + Prepaid Insurance Increase
Payments = $49,310 + $1,620 = $50,930<\/p>\n\n\n\n
\n\n\n\n
Answer: B) cash purchase of equipment<\/strong><\/p>\n\n\n\n
The direct method cash flow statement reports operating cash flows, which include cash receipts from customers, cash payments for interest, taxes, and salaries. The purchase of equipment is an investing activity and appears in the investing section, not the operating section.<\/p>\n","protected":false},"excerpt":{"rendered":"