Presented below are two independent situations. Situation A: Cheno with Co. reports revenues of $200,000 and operating

Question:

Presented below are two independent situations.

Situation A:

Cheno with Co. reports revenues of $200,000 and operating expenses of $110,000 in its first year of operations, 2010. Accounts receivable and accounts payable at year-end were $71,000 and $39,000, respectively. Assume that the accounts payable related to operating expenses. Ignore income taxes. Using the direct method, compute net cash provided (used) by operating activities.

Situation B:

The income statement for Edge brook Company shows cost of goods sold $310,000 and operating expenses (exclusive of depreciation) $230,000. The comparative balance sheet for the year shows that inventory increased $21,000, prepaid expenses decreased $8,000, accounts payable (related to merchandise) decreased $17,000, and accrued expenses payable increased $11,000. Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.

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