Williamsburg Company Uses the Direct Method to Prepare Its Statement

question 44

Essay

Williamsburg 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, 2018:
$\begin{array}{c}\text {Williamsburg Company}\\\text {Income Statement}\\\text {Year Ended December 31,2018}\\\begin{array}{|l|c|c|}\hline \text { Sales Revenue } & \$ 291,300 & \\\hline \text { Interest Revenue } & 1,000 & \\\hline \text { Gain on Sale of Plant Assets } & 6,000 & \\\hline \text { Total Revenues and Gains } & & \$ 298,300 \\\hline \text { Cost of Goods Sold } & 145,000 & \\\hline \text { Salaries and Wages Expense } & 49,000 & \\\hline \text { Depreciation Expense - Plant Assets } & 16,000 & \\\hline \text { Other Operating Expenses } & 25,000 & \\\hline \text { Interest Expense } & 3,500 & \\\hline \text { Income Tax Expense } & 7,800 & \\\hline \text { Total Expenses } & & \underline{246,300} \\\hline \text { Net Income } & & \$ 52,000 \\\hline\end{array}\end{array}$
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 2018, the company repaid $43,000 of long-term notes payable.
During 2018, 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:

Allowance Method

An approach in accounting that calculates expected losses from bad debts by assessing uncollectible accounts at the conclusion of each period.

Estimated Bad Debts

A provision in accounting for the amount of receivables that are expected not to be collected, considered an expense.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's receivables are turned over during a period.

Specific Accounts

Refers to accounts designated for specific purposes or transactions, distinguishing them from general or combined accounts.