LON-CAPA%20#9 Financial Accounting

# LON-CAPA%20#9 Financial Accounting - \$630,000 Liabilities...

This preview shows page 1. Sign up to view the full content.

This problem requires that you do the same kind of analysis that was done in study problems 17-39 and 17-41, but in this problem you have to analyze two accounts that are interrelated. To determine the two accounts that require analysis, consider the entries that are made when inventory is purchased, when sales are made, and when accounts payable are paid. Reno Construction Company's 2007 financial statements are shown below: Reno Construction Company Balance Sheet Assets 12/31/06 12/31/07 Cash \$125,000 \$100,000 Accounts Receivable \$127,000 \$163,000 Inventory \$111,000 \$136,000 Fixtures and Equipment \$570,000
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: \$630,000 Liabilities Accounts Payable \$114,000 \$138,000 Notes Payble \$102,000 \$134,000 Stockholders' Equity Paid-in Capital \$660,000 \$660,000 Retained Earnings \$57,000 \$97,000 Cost of Goods Sold in 2007 was \$380,000. REQUIRED What amount of cash did Reno pay to suppliers in 2007? Assume that all inventory purchases are on account. Change in Accounts Payable \$138,000 - \$114,000 = \$24,000 Change in Inventory \$136,000 - \$111,000 = \$25,000 \$24,000 - \$25,000 = -\$1,000 Amount of Cash Paid to Suppliers \$380,000 – (-\$1,000) = \$381,000 LON-CAPA Problem #9: Financial Accounting...
View Full Document

## This note was uploaded on 09/16/2009 for the course ACCT 230 taught by Professor Jacobs during the Spring '08 term at Michigan State University.

Ask a homework question - tutors are online