Presented in the left graph are trends in sales revenue and cash received from customers over a six-year period. In the right graph are trends in cost of goods sold and cash paid for inventory over a six-year period. All inventory is purchased with cash. $450,000 Sales Revenue vs. Cash Received from Customers Cost of Goods Sold vs. Cash Paid for Inventory $120,000 $400,000 $350,000 $300,000 $250,000 $200,000 $100,000 $80,000 $60,000 $40,000 $150,000 $100,000 $20,000 $50,000 $0 $0 Year 1 2 3 4 5 6 Year 1 2 3 4 5 6 Year-End Balance of Accounts Receivable Year-End Balance of Inventory -Sales Revenue -Cash Received from Customers -Cost of Goods Sold -Cash Paid for Inventory Click here to open the graphs in a new tab. Required: 1. In Year 1, which is higher - Sales Revenue or Cash Received? 2. In which year is it most likely the company had a large sale on account without cash being collected? 3. In which year does it appear the cash from that large sale on account is collected? 4. In a year that cash received from customers is greater than sales revenue, the year- end balance of Accounts Receivable: 5. In Year 1, which is higher - Cost of Goods Sold or Cash Paid? 6. In which year is it most likely the company had a large purchase of inventory without it being sold? 7. In which year does it appear the excess inventory was sold without an additional cash purchases of inventory to replace it? 8. In a year that cash paid to purchase inventory is greater than cost of goods sold, the year-end balance of Inventory:
Presented in the left graph are trends in sales revenue and cash received from customers over a six-year period. In the right graph are trends in cost of goods sold and cash paid for inventory over a six-year period. All inventory is purchased with cash. $450,000 Sales Revenue vs. Cash Received from Customers Cost of Goods Sold vs. Cash Paid for Inventory $120,000 $400,000 $350,000 $300,000 $250,000 $200,000 $100,000 $80,000 $60,000 $40,000 $150,000 $100,000 $20,000 $50,000 $0 $0 Year 1 2 3 4 5 6 Year 1 2 3 4 5 6 Year-End Balance of Accounts Receivable Year-End Balance of Inventory -Sales Revenue -Cash Received from Customers -Cost of Goods Sold -Cash Paid for Inventory Click here to open the graphs in a new tab. Required: 1. In Year 1, which is higher - Sales Revenue or Cash Received? 2. In which year is it most likely the company had a large sale on account without cash being collected? 3. In which year does it appear the cash from that large sale on account is collected? 4. In a year that cash received from customers is greater than sales revenue, the year- end balance of Accounts Receivable: 5. In Year 1, which is higher - Cost of Goods Sold or Cash Paid? 6. In which year is it most likely the company had a large purchase of inventory without it being sold? 7. In which year does it appear the excess inventory was sold without an additional cash purchases of inventory to replace it? 8. In a year that cash paid to purchase inventory is greater than cost of goods sold, the year-end balance of Inventory:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Presented in the left graph are trends in sales revenue and cash received from customers over a six-year period. In the right graph are trends in cost of goods sold and cash paid for inventory over a six-year period. All inventory is purchased with cash.
Transcribed Image Text:Presented in the left graph are trends in sales revenue and cash received from customers over a six-year period. In the right graph are
trends in cost of goods sold and cash paid for inventory over a six-year period. All inventory is purchased with cash.
$450,000
Sales Revenue vs. Cash Received from Customers
Cost of Goods Sold vs. Cash Paid for Inventory
$120,000
$400,000
$350,000
$300,000
$250,000
$200,000
$100,000
$80,000
$60,000
$40,000
$150,000
$100,000
$20,000
$50,000
$0
$0
Year 1
2
3
4
5 6
Year 1
2
3
4
5
6
Year-End Balance of Accounts Receivable
Year-End Balance of Inventory
-Sales Revenue
-Cash Received from Customers
-Cost of Goods Sold
-Cash Paid for Inventory
Transcribed Image Text:Click here to open the graphs in a new tab.
Required:
1. In Year 1, which is higher - Sales Revenue or Cash Received?
2. In which year is it most likely the company had a large sale on account without cash
being collected?
3. In which year does it appear the cash from that large sale on account is collected?
4. In a year that cash received from customers is greater than sales revenue, the year-
end balance of Accounts Receivable:
5. In Year 1, which is higher - Cost of Goods Sold or Cash Paid?
6. In which year is it most likely the company had a large purchase of inventory without
it being sold?
7. In which year does it appear the excess inventory was sold without an additional
cash purchases of inventory to replace it?
8. In a year that cash paid to purchase inventory is greater than cost of goods sold, the
year-end balance of Inventory:
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