presented below are two independent situations chenowith co 243048

Presented below are two independent situations.

Situation A:

Chenowith Co. reports revenues of $200,000 and operating expenses of $110,000 in its first year of operations, 2012. Accounts receivable and accounts payable at year-end were $71,000 and $39,000, respectively.

Assume that the accounts payable related to operating expenses. Ignore income taxes.


Using the direct method, compute net cash provided (used) by operating activities.

Situation B:

The income statement for Edgebrook Company shows cost of goods sold $310,000 and operating expenses (exclusive of depreciation) $230,000. The comparative balance sheet for the year shows that inventory increased $21,000, prepaid expenses decreased $8,000, accounts payable (related to merchandise) decreased $17,000, and accrued expenses payable increased $11,000.



(a) Cash payments to suppliers and

(b) Cash payments for operating expenses.

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