Prepare the Summary Entries Necessary to Determine the Amount of Cash

question 130

Essay

Prepare the summary entries necessary to determine the amount of cash paid to suppliers for each of the four independent situations below.
$$\begin{array} { c c c c c } \text { Situation } & \begin{array} { c } \text { Cost of } \\\text { goods sold }\end{array} & \begin{array} { c } \text { Inventory } \\\text { inc (dec) }\end{array} & \begin{array} { c } \text { Account } \\\text { payable } \\\text { inc (dec) }\end{array} & \begin{array} { c } \text { Cash paid } \\\text { to suppliers }\end{array} \\1 & 400,000 & 6,000 & 0 & \\2 & 400,000 & 0 & 7,000 & \\3 & 100,000 & 6,000 & 7,000 & \\4 & 100,000 & ( 6,000 ) & ( 7,000 ) &\end{array}$$

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Definitions:

Average Operating Assets

The average value of the assets used in the normal operations of a business over a specific period, typically used in return on investment calculations.

Balanced Scorecard

An integrated set of performance measures that are derived from and support the organization’s strategy.

Strategy

A company’s “game plan” for attracting customers by distinguishing itself from competitors.

Balanced Scorecard

A strategic planning and management system used by organizations to align business activities with the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals.