Bright Eyes Paints Company Uses the Direct Method for Preparing

question 72

Multiple Choice

Bright Eyes Paints Company uses the direct method for preparing its statement of cash flow.Bright Eyes reports the following information regarding 2017: From the income statement:
Sales Revenues,$266,000
Cost of Goods Sold,$212,000
Operating Expenses,$37,000
Net Income $17,000
From the balance sheet:
$$\begin{array} { | l | r | r | } \hline & \text { Beginning Balance } & \text { Ending Balance } \\\hline \text { Accounts Receivable } & \$ 14,900 & \$ 18,400 \\\hline \text { Merchandise Inventory } & 23,900 & 17,800 \\\hline \text { Accounts Payable } & 6,100 & 13,800 \\\hline \text { Accrued Liabilities } & 4,500 & 1,500 \\\hline\end{array}$$ Assume that there were no sales of long-term assets,no interest revenue,and no expenses other than the expenses shown above.Also,assume that Accounts Payable are for purchases of merchandise inventory only.What amount will be shown for the net cash flow from operating activities?

• A)$64,300
• B)$24,300
• C)$17,000
• D)$9,300

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Definitions:

Bill of Lading

A legal document between a shipper and a carrier detailing the type, quantity, and destination of the goods being transported.

Carrier

An entity or company that provides transportation services for goods, specializing in moving products from one location to another.

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Motor Carrier Cost

The expenses involved in transporting goods via motor vehicles, including fuel, maintenance, and driver wages.