Pastel Paints Company Uses the Direct Method for Preparing Its

question 10

Multiple Choice

Pastel Paints Company uses the direct method for preparing its statement of cash flow.Pastel reports the following information regarding 2017: From the income statement:
Sales Revenues,$267,000
Cost of Goods Sold,$210,000
Operating Expenses,$37,000
From the balance sheet:
$$\begin{array} { | l | r | r | } \hline & \text { Beginning Balance } & \text { Ending Balance } \\\hline \text { Accounts Receivable } & \$ 14,500 & \$ 18,300 \\\hline \text { Merchandise Inventory } & 23,500 & 17,800 \\\hline \text { Accounts Payable } & 6,100 & 13,800 \\\hline \text { Accrued Liabilities } & 4,700 & 1,800 \\\hline\end{array}$$ What amount will be shown for collections from customers?

• A)$263,200
• B)$270,800
• C)$267,000
• D)$32,800

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Definitions:

Consolidated Financial Statements

Financial reports that aggregate the financial position, results of operations, and cash flows of a parent company and its subsidiaries as if the group were a single entity.

Consolidated Balance Sheet

A financial statement showing the aggregated financial position of a parent company and its subsidiaries.

Cash

Physical form of currency such as coins and banknotes, representing the most liquid asset used for transactions.

Acquisition

The process by which a company purchases most or all of another company's shares to gain control of that company.