Inferring cash flows From balance sheet and income statement data (Based on a problem prepared by Stephen A. Zeff.) You work for the Plains State Bank in Miles City, Montana, as an analyst specializing in the financial statements of small businesses seeking loans from the bank. Digit Retail Enterprises Inc. provides you with its balance sheet for December 31, 2007 and 2008 (Exhibit 5.25), and its income statement for 2008 (Exhibit 5.26). Digit Retail Enterprises acquired no new property, plant, and equipment during the year.

a. Calculate the amount of cash received from customers during the year.

b. Calculate the acquisition cost of merchandise purchased during the year.

c. Calculate the amount of cash paid to suppliers of merchandise during the year.

d. Calculate the amount of cash paid to salaried employees during the year.

e. Calculate the amount of cash paid to insurance companies during the year.

f. Calculate the amount of cash paid to landlords for space rented during the year.

g. Calculate the amount of dividends paid during the year.

h. Calculate the amount of cash received when property, plant and equipment were sold during theyear.

Digit Retail Enterprises, Inc. Balance Sheet (Problem 33) EXHIBIT 5.25 December 31 December 31 2008 2007 ASSETS Current Assets $ 36,000 $ 50,000 Cash... Accounts Receivable . 38,000 23,000 Notes Receivable 7,500 Interest Receivable. 100 Merchandise Inventory Prepaid Insurance. Prepaid Rent 65,000 48,000 12,000 9,000 2,000 Total Current Assets $165,000 $125,600 Property, Plant, and Equipment At Cost.. 5 90,000 $100,000 Less Accumulated Depreciation (20,000) S 80,000 (35,000) $ 55,000 Net Total Assets s220,000 $205,600 LIABILITIES AND SHAREHOLDER'S EQUETY Current Liabilities S 20,000 Accounts Payable-Merchandise Suppliers Salaries Payable .. Rent Payable $ 18,000 2,800 2,100 3,000 Advances from Customers 6,100 8,500 Note Payable . Dividends Payable. Other Current Liabilities,. 5,500 4,200 2,600 3,700 $ 43,700 1,300 $ 34,100 Total Current Liabilities Shareholders Equity Common Stock. Retained Earnings Total Shareholders Equity $154,500 $160,000 11,800 11,500 $176,300 $171,500 $205,600 Total Liabilities and Shareholders Equity $220,000