The following items relate to the preparation of a statement of cash flows:
| | Year 2 | Year 1 | | Year 2 | | Cash | $150,000 | $100,000 | Net sales | $3,200,000 | | MES* (Available for sale) | 40,000 | 0 | CGS | (2,500,000) | | AR net | 420,000 | 290,000 | Expenses | (500,000) | | Inventory | 330,000 | 210,000 | Net income | $ 200,000 | | Noncurrent assets | 565,000 | 300,000 | | | | Accum. Deprec. | (5,000) | (25,000) | | |
*Cost and market value
All accounts receivable relate to trade merchandise. Cash discounts are not allowed to customers but a service charge is added to an account for late payment. The allowance for doubtful accounts at the end of year 2 was the same as the end of year 1; no receivables were charged against the allowance during year 2. Under investing activities, cash outflows during year 2 totaled
A. $265,000B. $275,000 C. $ 40,000 D. $305,000 |
