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# Cash Flows and Computing Purchases

You are given the following selected, non-ordered balance sheet accounts at December 31 and income statement accounts for the year 2005.
2005 2004
Accounts Receivable \$36,000 \$30,000
Inventories 22,000 25,000
Accounts Payable 39,000 35,000
Salaries Payable 1,000 2,000
Equipment 60,000 40,000
Accumulated Depreciation 12,000 16,000
Notes Payable -0- 50,000
Common Stock 40,000 10,000
Dividends Payable 8,000 15,000
Retained Earnings 38,000 20,000

Net Sales \$430,000
Cost of goods sold 300,000
Depreciation Expense 8,000
Other operating expenses 84,000
Gain on sale of equipment 2,000
Net income \$ 40,000

The accounting records revealed the following additional information:

A. Equipment with a cost of \$15,000 and a book value of \$3,000 was sold for \$5,000 during 2005. New equipment was purchased.
B. Common stock with a par value of \$13,000 was issued to a lender in exchange for the payoff of the principal of the note payable due during 2005. No new funds were borrowed during the year.
C. The only items affecting retained earnings in 2005 were net income and cash dividends declared.

Required:

1. What amount of cash was collected from customers during 200%?
2. What amount of cash was paid for purchases of merchandise during 2005?
3. What amount of cash was paid to acquire equipment during 2005?
4. What amount of cash was received the stock issued for during 2005?
5. What amount of cash was paid for dividends during 2005?

#### Solution Summary

The solution explains how to compute the amount of cash inflow or outflow for the given requirements

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