Banner Company Had Total Operating Expenses of $160,000 in 2010

question 157

Essay

Banner Company had total operating expenses of $160,000 in 2010, which included Depreciation Expense of $25,000. Also, during 2010, prepaid expenses increased by $5,000 and accrued expenses decreased by $6,700.
Instructions
Calculate the amount of cash payments for operating expenses in 2010 using the direct method.

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Definitions:

Allowance Method

An accounting technique used to anticipate and adjust for potential future losses from uncollectible accounts receivable.

Uncollectible Accounts

Accounts receivable that are recognized as not being collectible, leading to a write-off as a bad debt expense.

Bad Debts Expense

Bad debts expense is an estimate of the accounts receivable that a company does not expect to collect, treated as an expense on the income statement.

Payment on Account

A payment made towards an outstanding account balance, before the final settlement of the account.