Question

Kello company had cash receipt from customers in 2o2o of Br.142000.Cash payments for operating expenses were Br.97000.Kello has determined thet at January 1, accounts receivable was Br.13000 and prepaid expense were Br.17500.At December 31, accounts receivable was Br.18600and prepaid expenses were Br.23200,compute (a) service revenue and (b) operating expenses.

Answer 1

Answer:

• a. Br. 147,600
• b. Br. 91,300

Explanation:

a. Service revenue

= Cash receipts + Increase in accounts receivable

= Cash receipts + (Closing accounts receivable balance - opening accounts receivable balance)

= 142,000 + (18,600 - 13,000)

= Br. 147,600

b. Operating expenses

= Payment for operating expenses - increase in prepaid expenses

= 97,000 - (23,200 - 17,500)

= Br. 91,300