For Each of the Following Separate Cases, Use the Information

question 121

Essay

For each of the following separate cases, use the information provided to calculate the missing cash inflow or cash outflow using the direct method.
$\begin{array}{c}\begin{array}{|l}\hline \text {(a)}\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline \text {(b)}\\\hline \\\hline \\\\\hline \\\hline \\\hline \\\hline \\\hline \\\hline \\\hline \text {(c)}\\\hline \\\hline \\\hline \\\hline \\\hline\end{array}\begin{array}{|l|} \hline \text { Accounts receivable balances:}\\ \hline \text { Beginning of year}\\ \hline \text { End of year}\\ \hline \text { Sales revenue (all on credit)}\\ \hline \text { Cash received from customers}\\ \hline \\ \hline \text { Accounts payable balances:}\\ \hline \text { Beginning of year}\\ \hline \text { End of}\\\text { year.}\\ \hline \text { Merchandise inventory balances:}\\ \hline \text { Beginning of year}\\ \hline \text { End of year}\\ \hline \text { Cost of goods sold}\\ \hline \text { Cash paid for merchandise inventory}\\ \hline \\ \hline \text { Interest payable balances:}\\ \hline \text { Beginning of year}\\ \hline \text { End of year}\\ \hline \text { Interest expense}\\ \hline \text { Cash paid for interest}\\ \hline \end{array}\begin{array}{l|}\hline\\\hline \$ 60,000 \\\hline 57,000 \\\hline 375,000 \\\hline \$\underline{\quad\quad} \\\hline\\ \hline\\\hline \$ 42,000 \\\hline \\45,000 \\\hline\\\hline 50,000 \\\hline 47,500 \\\hline 250,000 \\\hline \$ \underline{\quad\quad} \\\hline \\\hline \\\hline 7,500 \\\hline 9,200 \\\hline 35,000 \\\hline\$\underline{\quad\quad} \\\hline \end{array}\end{array}$

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Definitions:

Set Off

Set off is a legal mechanism allowing parties to mutually cancel out monetary claims against each other by offsetting debts, thereby simplifying payment processes.

Financial Asset

An asset that derives value because of a contractual claim, such as cash, stocks, bonds, and bank deposits.

Financial Liability

An obligation to deliver cash or another financial asset to another entity, or to exchange financial instruments under potentially unfavorable conditions.

Offset Conditions

Conditions that allow entities to negate or counterbalance one position with another, commonly used in accounting and finance to manage risk or net-off liabilities against assets.