Ch03 In-Class Ex

# 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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