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branjo24
Mar 11, 2011, 09:34 PM
I am having trouble figuring this questions out, can someone please assist me?

College Television Company had supplies on its balance sheet at December 31, 2010 of $20,000. The income statement for 2011 showed supplies expense of $50,000. The balance sheet at December 31, 2011 showed supplies of $25,000. If no supplies were purchased on account (all were cash purchases) how much cash did College Television Company spend on supplies during 2011? How would that cash outflow be classified on the statement of cash flows?

Thank you.

pready
Mar 12, 2011, 12:12 PM
You have your beginning balance of $20,000 - your expense of $50,000 and you have an ending balance of $25,000 of supplies. Now you have the information to solve for your Supplies Purchases(cash outflow), which will be an operating activity on the Statement of Cash Flows.

$20,000 Beginning Supplies Balance
(50,000) Supplies Expense
unknown -Supplies purchased (You need to calculate this amount)
=====
$25,000 Ending Supplies Balance

branjo24
Mar 12, 2011, 12:51 PM
Thank you, I had most of it correct, but was making it harder than I needed to.