Question
Tanglewood, Inc. uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ended December
Tanglewood, Inc. uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ended December 31, 2018:
Tanglewood, Inc.
Comparative Balance Sheet
December 31, 2018 and 2017
2018 | 2017 | Increase (Decrease) | |
Cash | $35,200 | $15,200 | $20,000 |
Accounts Receivable | 29,200 | 36,200 | (7,000) |
Merchandise Inventory | 53,600 | 26,600 | 27,000 |
PP&E, net | 126,000 | 92,000 | 34,000 |
Total Assets | $244,000 | $170,000 | $74,000 |
Accounts Payable | 8,900 | 12,900 | $(4,000) |
Accrued Liabilities | 6,100 | 2,100 | 4,000 |
Longminusterm Notes Payable | 71,000 | 80,000 | $(9,000) |
Total Liabilities | $86,000 | $95,000 | $(9,000) |
Common Stock | $55,000 | $3,000 | $52,000 |
Retained Earnings | 115,000 | 78,000 | 37,000 |
Treasury Stock | (12,000) | (6,000) | (6,000) |
Total Stockholders' Equity | $158,000 | $75,000 | $83,000 |
Total Liabilities and Stockholders' Equity | $244,000 | $170,000 | $74,000 |
Tanglewood, Inc.
Income Statement
December 31, 2018
Sales Revenue | $289,900 | |
Interest Revenue | 2,400 | |
Gain on Sale of Plant Assets | 6,000 | |
Total Revenues and Gains | $298,300 | |
Cost of Goods Sold | 148,700 | |
Salaries and Wages Expense | 46,600 | |
Depreciation Expenselong dashPlant Assets | 16,000 | |
Other Operating Expense | 23,700 | |
Interest Expense | 3,500 | |
Income Tax Expense | 7,800 | |
Total Expenses | 246,300 | |
Net Income | $52,000 |
Use the direct method to compute the payments to suppliers for Merchandise Inventory and other operating expenses. (Accrued Liabilities relate to other operating expense.)
A.
$199,400
B.
$19,700
C.
$203,400
D.
$179,700
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