PROBLEM #1
The following accounts are a portion of the accounts reported in Company ZZZZZZZZZ trial
balance.
Account 2019 2018
Accounts Receivable 42,000 39,500
Inventory 28,600 31,000
Accounts Payable 19,000 21,300
Income Taxes Payable 13,000 5,000
Prepaid Insurance 700 2,000
Notes Payable 46,000 67,000
Sales 520,000 498,000
COGS 317,000 269,000
Income tax expense 22,800 19,900
Insurance Expense 8,000 10,000
Bad debt expense 16,000 11,000
(1) What amount of cash was collected from customers assuming $2000 in write offs?
(2) What amount of cash was paid for inventory?
(3) What amount of cash was paid for income taxes?
(4) What amount of cash was spent for prepaid insurance?
(5) Assuming an additional borrowing of $10,000, what was the amount of cash spent to
make payments on the outstanding notes payable?
PROBLEM #2
Company Metro had a beginning and ending net realizable value of accounts receivable of
$25,500 and $35,800. During the year, the company recognized bad debt expense of $4,000 but
no accounts were considered uncollectible at year end. Credit sales were $180,000 during the
year although there were also cash sales amounting to $45,000.
What is the amount reported as cash collections from customers?
What is the amount reported as cash sales?
