Revenue $ 560,000, mark up % 33.33%, closing inventory $80,000 (an increase of 100% compared with the opening inventory), payables b/f $ 79,000, payables carried forward $160,000, receiveables b/f $62,000, receivabales c/f $59,500, bad debts written off during the year $ 3,500, allowance for receivables b/f $8,620,allowance for receivables c/f $ 15,200
how much cash was paid to the suppliers/payables in the year?
sorry, i totally have no idea how to approach this 'mega question'.
any help would be much appreciated
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how to solve this?cash flow direct method
10y ago#1The extent of knowledge required about direct method cash flows is illustrated in the free course notes where there is a quick example.
Trust me here, there is no need to go further in to the topic than the illustration in those notes
answers:
a) 569000
b) 407000
c) 379000
d) 541000
working:
payable b/f= 79000
cost + profit = selling price
cost (100) + profit (33.33) = selling price (133.33)
profit = 560,000 * 33.33/133.33= 140000
cost = 560000-140000=420,000
closing inventory 80,000
increased 100%, thus 40,000
total purchase 460,000
credit side t balance 79,000+460,000=539,000
debit side c/f = 160,000
thus cash = $539000-$160,000=$379,000 (c)
am i right? so ignore the bad debts as it is for receivables calculation right
10y ago#3I'm not wasting my time answering this! I've already told you, it won't come up!
ok i will drop this part then =D
10y ago#5Good thinking!
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