Dependable Tires Company Uses the Indirect Method to Prepare the Statement

question 8

Essay

Dependable Tires Company uses the indirect method to prepare the statement of cash flows. Refer to the following comparative balance sheet for Dependable Tires Company and complete the third column to show the increases or decreases.
$\begin{array}{c} \text {Dependable Tires Company }\\ \text {Comparative Balance Sheet}\\ \text { December 31, 2018 and 2017}\\\begin{array}{lllc}&&& \text { Increase/ } \\&2018 & 2017 & \text { (Decrease }\\\text { Cash } & \$ 39,600 & \$ 19,800 & \\\text { Accounts Receivable } & 26,400 & 38,500 & \\\text { Merchandise Inventory } & \underline{204,000} & \underline{126,500} & \\\text { Total Assets } & \underline{270,000} & \underline{184,800} & \end{array}\end{array}$

$$\begin{array} { l l l } \text { Accounts Payable } & 4,000 & 6,600 \\\text { Accrued Liabilities } & 2,400 & 1,100 \\\text { Long-term Notes Payable } & \underline { 100,000 } & \underline { 99,000 } \\\text { Total Liabilities } & \underline { 108,000 } & \underline { 106,700 }\end{array}$$ $$\begin{array} { l c c } \text { Common Stock } & 36,000 & 2,200 \\\text { Retained Earnings } & 135,600 & \text { 81,400 } \\\text { Treasury Stock } & \underline { ( 9,600 ) }&\underline { ( 5,500 )} \\\text { Total Stockholders' Equity } & \underline { 162,000 } & \underline { 78,100 }\end{array}$$ $\text { Total Liabilities and Stockholders' Equity }$ $\quad$ $270,000 $\quad$ $184,800

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Definitions:

Marginal Expenditure

The additional cost incurred from producing or purchasing one more unit of a good or service.

Average Expenditure

The average amount of money spent per unit of time, often calculated for goods, services, or a combination of both by consumers or businesses.

Monopsonist

A market condition where there is only one buyer for a product or service, giving the buyer significant power over prices.

Competitive Buyer

A buyer in a market where numerous purchasers compete to acquire goods or services, often leading to more favorable prices.