Parmesan Company uses the direct method for its cash flow statement.It reports the following information regarding the year 2016:
From the income statement:
Sales revenue,$268,000
Cost of sales,$211,000
Operating expenses,$36,000
From the balance sheet:
$\begin{array}{|l|l|l|} \hline&{\text { Beginuing balance }} & \text { Ending balance } \\\hline \text { Accounts receivable: } & \$ 15,000 & \$ 17,800 \\\hline \text { Inventory: } & 24,100 & 18,000 \\\hline \text { Accounts payable: } & 6100 & 13,800 \\\hline \text { Accrued liabilities: } & 4800 & 2000\\\hline\end{array}$ On the cash flow statement,what amount will be shown for payments to suppliers for operating expenses? (Assume that Accounts payable are for purchases of inventory only and Accrued liabilities relate to operating expenses. )

Question

Parmesan Company uses the direct method for its cash flow statement.It reports the following information regarding the year 2016:
From the income statement:
Sales revenue,$268,000
Cost of sales,$211,000
Operating expenses,$36,000
From the balance sheet:

\begin{array}{|l|l|l|} \hline&{\text { Beginuing balance }} & \text { Ending balance } \\\hline \text { Accounts receivable: } & \$ 15,000 & \$ 17,800 \\\hline \text { Inventory: } & 24,100 & 18,000 \\\hline \text { Accounts payable: } & 6100 & 13,800 \\\hline \text { Accrued liabilities: } & 4800 & 2000\\\hline\end{array}

On the cash flow statement,what amount will be shown for payments to suppliers for operating expenses? (Assume that Accounts payable are for purchases of inventory only and Accrued liabilities relate to operating expenses. )

Quizplus · Accepted Answer

Payments to suppliers for operating expenses = Beginning accrued liabilities + Operating expenses - Ending accrued liabilities= $4,800 + $36,000 - $2,000= $38,800

Parmesan Company Uses the Direct Method for Its Cash Flow