Ch03 In-Class Ex - Required 1 Calculate the company’s net...

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Chapter 3 In-Class Exercise The Tree House Store is a retailer of natural wood furniture for kids’ bedrooms and playrooms. During April, the firm had the following operating activities. Date Event 1 Bought $8,750 of goods for resale from The Mountain Man Manufacturing on credit 5 Paid $788 to the local newspaper for advertising that ran during March 6 Paid $1,700 rent for the month of April 9 Sold goods to customers for $12,800 on credit. These goods had cost the firm $6,300. 10 Paid $5,250 to The Mountain Man Manufacturing in partial payment for goods purchased April 1. 11 Collected $9,360 from goods sold on April 9. 13 Bought $16,100 of goods for resale from Appalachia Company. Paid cash. 16 Paid employees for their work so far in April, $1,830. 19 Sold goods to customers on credit for $11,000. These goods had cost the firm $4,200. 25 Collected $6,475 from the sales made on April 19. 29 Paid $1,700 rent for the month of May. 30 Employees had earned an additional $2,100 of wages but would not be paid until May 1.
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Unformatted text preview: Required 1. Calculate the company’s net cash flows from operating activities for the month of April. You do not need to prepare a formal statement of cash flows. 2. Calculate the company’s net income for the month of April. You do not need to prepare a formal income statement. Chapter 3 In-Class Exercise Solution Required 1. The Tree House Store Net Cash Flow from Operating Activities For April Cash receipts: Collected from customers ($9,360 + $6,475) $ 15,835 Cash payments: Merchandise ($5,250 + $16,100) $21,350 Advertising 788 Rent (for April and May) 3,400 Wages 1,830 Total payments 27,368 Net cash flow from operating activities $ (11,533 ) B. The Tree House Store Accrual Basis Income Statement For April Sales ($12,800 + $11,000) $ 23,800 Expenses: Cost of goods sold ($6,300 + $4,200) $10,500 Rent (one month only) 1,700 Wages ($1,830 + $2,100) 3,930 Total expenses 16,130 Net income $ 7,670...
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This note was uploaded on 11/30/2010 for the course ACC 310F taught by Professor Verduzco during the Spring '07 term at University of Texas.

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Ch03 In-Class Ex - Required 1 Calculate the company’s net...

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