Mei Company Uses the Direct Method to Prepare Its Statement

question 68

Multiple Choice

Mei Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year 2014: Cost of Goods Sold, $155,000
Inventory, beginning balance, $26,000
Inventory, ending balance, $63,000
Accounts Payable, beginning balance, $8,100
Accounts Payable, ending balance, $5,100
Operating expenses, $27,000
Accrued Liabilities, beginning balance, $2,500
Accrued Liabilities, ending balance, $6,000
In the operating activities section of the statement of cash flows, what amount will be shown for payments to suppliers? Assume Accrued Liabilities relate to Operating Expenses.

• A)$171,500
• B)$160,000
• C)$195,000
• D)$218,500

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Definitions:

Previous Month

A term referring to the month that directly precedes the current month in the calendar.

Itemized List

A detailed list where individual items or elements are separately presented and often described or quantified.

Diplomatic Way

A strategy or method that involves handling situations in a sensitive, tactful, and effective manner, often to maintain good relationships and avoid conflict.

Payment

The transfer of money or goods in exchange for a product or service.