The following information applies to Quality Tech, Inc.: Quality Tech, Inc. Income Statement For the Year Ended

Question:

The following information applies to Quality Tech, Inc.:

Quality Tech, Inc.

Income Statement

For the Year Ended June 30, 2009

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,000)

Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25,000)

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000

Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,000)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,000)

1. Accounts receivable started the year with a balance of $2,500 and ended the year with a balance of $500.

2. The beginning balance in accounts payable (to vendors) was $5,000, and the ending balance for the year was $3,000. Inventory at the end of the year was $1,000 more than at the beginning of the year.

3. The company started the year with $5,000 of prepaid insurance and ended the year with $5,750 of prepaid insurance.

Determine the following cash flows:

a. Cash collected from customers for sales during the year

b. Cash paid to vendors for inventory during the year

c. Cash paid for insurance during the year

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...