Vatsala Company uses the direct method for its statement of cash flow. It report
ID: 2453093 • Letter: V
Question
Vatsala Company uses the direct method for its statement of cash flow. It reports the following information regarding the year 2014:
From the income statement: Sales Revenues, $265,000 Cost of Goods Sold, $210,000 Operating expenses, $31,000
From the balance sheet:
Beginning Balance Ending Balance
Accounts Receivable: $14,500 $17,800
Inventory: 23,500 17,800
Accounts Payable: 6,000 13,500
Accrued Liabilities: 4,000 1,500
On the statement of cash flows, what amount will be shown for payments to suppliers for inventory purchases? (Assume that Accounts Payable are for purchases of inventory only.) A) $204,300 B) $211,800 C) $196,800 D) $208,200
Explanation / Answer
C) $196,800
Explanation:
Cost of goods sold = $ $210,000
Less:
Decreased in Inventory = $5,700 ( 23,500 -17,800 =$5,700)
Increased In Accounts Payable =$7,500 ( 6,000 -13,500=$7,500)
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Total = $196,800
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