c. I
n
ve
n
t
or
y …………………………………………………………. 7,500
Accounts Payable…………………………………………… 7,500
Change
in
Cash
d. Cost of Retail Merchandise
S
o
l
d …………………………………… $ (90,000)
Plus Decrease in Inventory of Retail Merchandise
($10,000 – $11,000) …………………………………………………. 1
,
000
Less Increase in Advances to Suppliers of Retail
Merchandise ($10,500 – $10,000) ……………………………… (500)
Less Decrease in Accounts Payable to Suppliers of Retail
Merchandise ($7,700 – $8,000) ………………………………….
(
30
0
)
Cash Paid to Suppliers of Retail Merchandise……………….. $
(
8
9
, 80
0
)
6.33 (Digit Retail Enterprises, Inc.; inferring cash flows from balance sheet and income
statement data.) (amounts in US$)
Salaries…… (280)
Depreciation
Expense…. (54)
—
54
(2
)
Increase
(Expense Not Using Cash)
= Interest Payable Decrease
(20)
—
(14
Payments for Wages
and
Salaries
Payments for Interest
Net Income………………
$ 44
T
otal
s
$ 77
= Cash Flow from
Operations
$
7
7 = Cash Flow from Operations
Derived via
Derived via Direct
Method
6.34 a. continued.
I
n
t
e
r e s
t
P
ay
a
b
l
e
M
o r
t
gag
e
P
a
ya
b
l
e
C
o
m
m
on S
t
o c k
10 √ 120 √ 250
√
(9) 2 (10) 11
8 √ 109 √ 250
√
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
140 √
(2) 10 44 (1)
174 √
Solutions6-22
6.34 continued.
b. Deriving Direct Method Cash Flow from Operations Using Data from T-Account Work Sheet (all dollar amounts in
thousands of US$)
1. Copy income statement and cash flow from operations; see column (a) in the display below.
2. Copy Information from T-Account work sheet next to related income statement item; see columns (b) and (c) in the
display below.
3. Sum across rows to derive direct receipts and expenditures; see column (d) in the display below.
d. Cost of Retail Merchandise
S
o
l
d …………………………………… $ (90,000)
Plus Decrease in Inventory of Retail Merchandise
($10,000 – $11,000) …………………………………………………. 1
,
000
Less Increase in Advances to Suppliers of Retail
Merchandise ($10,500 – $10,000) ……………………………… (500)
Less Decrease in Accounts Payable to Suppliers of Retail
Merchandise ($7,700 – $8,000) ………………………………….
(
30
0
)
Cash Paid to Suppliers of Retail Merchandise……………….. $
(
8
9
, 80
0
)
6.33 (Digit Retail Enterprises, Inc.; inferring cash flows from balance sheet and income
statement data.) (amounts in US$)
Salaries…… (280)
Depreciation
Expense…. (54)
—
54
(2
)
Increase
(Expense Not Using Cash)
= Interest Payable Decrease
(20)
—
(14
Payments for Wages
and
Salaries
Payments for Interest
Net Income………………
$ 44
T
otal
s
$ 77
= Cash Flow from
Operations
$
7
7 = Cash Flow from Operations
Derived via
Derived via Direct
Method
6.34 a. continued.
I
n
t
e
r e s
t
P
ay
a
b
l
e
M
o r
t
gag
e
P
a
ya
b
l
e
C
o
m
m
on S
t
o c k
10 √ 120 √ 250
√
(9) 2 (10) 11
8 √ 109 √ 250
√
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
140 √
(2) 10 44 (1)
174 √
Solutions6-22
6.34 continued.
b. Deriving Direct Method Cash Flow from Operations Using Data from T-Account Work Sheet (all dollar amounts in
thousands of US$)
1. Copy income statement and cash flow from operations; see column (a) in the display below.
2. Copy Information from T-Account work sheet next to related income statement item; see columns (b) and (c) in the
display below.
3. Sum across rows to derive direct receipts and expenditures; see column (d) in the display below.