The following information was reported by three companies. When completing the requirements, assume that any and all purchases on account are for inventory.

Required:
1. What amount did each company deduct on the income statement related to inventory?
2. What total amount did each company pay out in cash during the period related to inventory purchased with cash and on account?
3. By what amount do your answers in 1 and 2 differ for each company?
4. By what amount did each company’s inventory increase (decrease)? By what amount did each company’s accounts payable increase (decrease)?
5. Using the indirect method of presentation, what amount(s) must each company add (deduct) from net income to convert from accrual to cash basis?
6. Describe any similarities between your answers to requirements 3 and 5. Are these answers the same? Why or whynot?

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Bikes Unlimited Aztec Corporation $175 200 Campus Cycles $350 200 200 Cost of goods sold Inventory purchases from $175 suppliers made using cash Inventory purchases from suppliers made on account Cash payments to suppliers 200 on account Beginning inventory Ending inventory Beginning accounts payable Ending accounts payable 160 100 125 80 120 160 200 250 80 120 100 125