Bright Eyes Paints Company uses the direct method for preparing its statement of cash flow

Question

Bright Eyes reports the following information regarding 2017:

From the income statement:
Sales Revenues, $266,000
Cost of Goods Sold, $212,000
Operating Expenses, $37,000
Net Income $17,000

From the balance sheet:

Beginning Balance Ending Balance
Accounts Receivable $14,900 $18,400
Merchandise Inventory 23,900 17,800
Accounts Payable 6,100 13,800
Accrued Liabilities 4,500 1,500

Assume that there were no sales of long-term assets, no interest revenue, and no expenses other than the expenses shown above. Also, assume that Accounts Payable are for purchases of merchandise inventory only. What amount will be shown for the net cash flow from operating activities?
A) $64,300
B) $24,300
C) $17,000
D) $9,300

Answer 1

B .B)
Accounts Receivable, beginning balance $14,900
Add: Sales Revenues 266,000
Less: Accounts Receivable, ending balance (18,400 )
Collections from Customers (a) $262,500

Merchandise Inventory, ending balance $17,800
Add: Cost of Goods Sold 212,000
Less: Merchandise Inventory, beginning balance (23,900 )
Purchases $205,900
Add: Accounts Payable, beginning balance 6,100
Less: Accounts Payable, ending balance (13,800 )
Cash Paid for Merchandise Inventory (b) $198,200

Accrued Liabilities, beginning balance $4,500
Add: Operating Expenses 37,000
Less: Accrued Liabilities, ending balance ($1,500 )
Cash Paid for Operating Expenses (c) $40,000