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Case A: Compute cash received for interest Case B: Compute cash paid for wages Interest revenue $ 6,600 Wages expense $ 12,200 Interest receivable, beginning of year 920 Wages payable, beginning of year 5,400 Interest receivable, end of year 2,500 Wages payable, end of year 4,200 For each separate case, compute the required cash flow information for BioClean.

Answer :

Answer:

Interest received is $5.020

Wages paid  is $13,400

Explanation:

The task is compute cash for interest for Case A and cash paid as wages for Case B in the year:

Computation of cash for interest:

interest revenue                     $6,600

opening interest receivable    $920

closing interest receivable    ($2,500)

Cash received                        $5,020

The closing balance was deducted because it a part of interest revenue for current year whose cash inflow is yet to be received and the opening interest receivable was added because the related cash would have been received during year.

Wages expense                                   $12,200

wages payable (opening balance)      $5,400

wages payable (closing balance)       ($4200)

wages paid                                           $13,400

The $5,400 was wages owed last year paid this year and the $4,200 is the wages owed this year expected to paid next year.

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