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Tanglewood, Inc Use the Direct Method to Compute the Payments to Suppliers

question 160

Multiple Choice

Tanglewood, Inc. uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ended December 31, 2018: $Tanglewood, Inc. uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ended December 31, 2018: \begin{array}{c}\text { Tanglewood, Inc.}\\ \text { Income Statement }\\ \text { December 31,2018}\\ \begin{array}{|l|l|l|} \hline \text { Sales Revenue } & \$ 289,900 & \\ \hline \text { Interest Revenue } & 2400 & \\ \hline \text { Gain on Sale of Plant Assets } & \underline{6,000} & \\ \hline \text { Total Revenues and Gains } & & \$ 298,300 \\ \hline \text { Cost of Goods Sold } & 148,700 & \\ \hline \text { Salaries and Wages Expense } & 46,600& \\ \hline \text { Depreciation Expense - Plant Assets } & 16,000& \\ \hline \text { Other Operating Expense } &23,700& \\ \hline \text { Interest Expense } & 3,500 & \\ \hline \text { Income Tax Expense } &\underline{7,800} & \\ \hline \text { Total Expenses } & & \underline{246,300} \\ \hline \text { Net Income } & &\underline{\$ 52,000} \\ \hline \end{array}\end{array} Use the direct method to compute the payments to suppliers for Merchandise Inventory and other operating expenses. (Accrued Liabilities relate to other operating expense.) A) $199,400 B) $179,700 C) $19,700 D) $203,400$ $\begin{array}{c}\text { Tanglewood, Inc.}\\\text { Income Statement }\\\text { December 31,2018}\\\begin{array}{|l|l|l|}\hline \text { Sales Revenue } & \$ 289,900 & \\\hline \text { Interest Revenue } & 2400 & \\\hline \text { Gain on Sale of Plant Assets } & \underline{6,000} & \\\hline \text { Total Revenues and Gains } & & \$ 298,300 \\\hline \text { Cost of Goods Sold } & 148,700 & \\\hline \text { Salaries and Wages Expense } & 46,600& \\\hline \text { Depreciation Expense - Plant Assets } & 16,000& \\\hline \text { Other Operating Expense } &23,700& \\\hline \text { Interest Expense } & 3,500 & \\\hline \text { Income Tax Expense } &\underline{7,800} & \\\hline \text { Total Expenses } & & \underline{246,300} \\\hline \text { Net Income } & &\underline{\$ 52,000} \\\hline\end{array}\end{array}$ Use the direct method to compute the payments to suppliers for Merchandise Inventory and other operating expenses. (Accrued Liabilities relate to other operating expense.)

Definitions:

Corporate Bond

A debt security issued by a corporation to raise funding, which promises to pay back with interest.

Annuities

Financial products that provide a stream of payments over time to the holder, often used for retirement purposes.

Retirement Years

The period of life after one ceases working full time based on achieving a certain age or financial status.

Annual Return

The percentage change in an investment's value over a one-year period, including any dividends or interest, reflecting the compound annual growth rate.