Problem 2–12 Requirement 1 Computations: Sales revenue: Cash collected from customers Add: Increase in accounts receivable Sales revenue $675,000 30,000 $705,000 Interest revenue: Cash received Add: Amount accrued at the end of 2013 ($50,000 x .08 x 9/12) Deduct: Amount accrued at the end of 2012 Interest revenue Cost of goods sold: Cash paid for merchandise Add: Increase in accounts payable Purchases during 2013 Add: Decrease in inventory Cost of goods sold $4,000 3,000 (c) (3,000) $4,000 $390,000 12,000 402,000 18,000 $420,000 Insurance expense: Cash paid Add: Prepaid insurance expired during 2013 Deduct: Prepaid insurance on 12/31/13 ($6,000 x 4/12) Insurance expense Salaries expense: Cash paid Add: Increase in salaries payable Salaries expense $6,000 2,500 (2,000) (a) $6,500 $210,000 4,000 $214,000 2– Solutions Manual, Vol.1, Chapter 2 89 Problem 2–12 (continued) Interest expense: Amount accrued at the end of 2013 ($100,000 x .06 x 2/12) $1,000 (d) Rent expense: Amount paid Add: Prepaid rent on 12/31/12 expired during 2013 Deduct: Prepaid rent on 12/31/13 ($24,000 x 6/12) Rent expense Depreciation expense: Increase in accumulated depreciation Zambrano Wholesale Corporation Income statement For the Year Ended December 31, 2013 Sales revenue Cost of goods sold Gross profit Operating expenses: Insurance Salaries Rent Depreciation Total operating expenses Operating income Other income (expense): Interest revenue Interest expense Net income 2–90 $705,000 420,000 285,000 $ 6,500 214,000 23,000 10,000 4,000 (1,000) 253,500 31,500 3,000 $34,500 $24,000 11,000 (12,000) (b) $23,000 $10,000 Problem 2–12 (concluded) Requirement 2 a. Prepaid insurance b. Prepaid rent c. Interest receivable d. Interest payable $ 2,000 12,000 3,000 1,000 2– Solutions Manual, Vol.1, Chapter 2 91