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