Skyler's Wine Company Uses the Direct Method to Prepare Its

question 81

Essay

Skyler's Wine Company uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ending December 31, 2017:
Skyler's Wine Company
Comparative Balance Sheet
December 31, 2017 and 2016 Skyler's Wine Company
Income Statement
Year Ended December 31, 2017 Additional information provided by the company includes the following:
Equipment costing $60,000 was purchased for cash.
Equipment with a net asset value of $10,000 was sold for $16,000.
During 2017, the company repaid $43,000 of long-term notes payable.
During 2017, the company borrowed $34,000 on a new note payable.
There were no stock retirements during the year.
There were no sales of Treasury Stock during the year.
Prepare a complete statement of cash flows using the direct method.
Accrued Liabilities relate to other operating expenses.

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Definitions:

Selling Price

The amount a buyer pays to purchase a product or service from a seller.

Variable Cost

A cost that varies with the level of output or production, such as materials and labor directly involved in manufacturing.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent or a salaried employee's wages.

Variable Costs

Expenses that change in proportion to the activity or volume of production, sales, or services rendered.