Truesdell Brewery Company Uses the Direct Method for Its Statement

question 61

Essay

Truesdell Brewery Company uses the direct method for its statement of cash flow.Assume Accrued Liabilities relate to Operating Expenses.It reports the following information regarding the year ending December 31,2017:
Truesdell Brewery Company
Income Statement
For the Year Ended December 31, 2017 $$\begin{array} { l l } \text { Sales Revenue } & \$ 312,000 \\\text { Cost of Goods Sold } & 247,000 \\\text { Operating expenses } &\underline{ 32,500 }\\\text { Net Income } & \underline{ \$ 32,500}\end{array}$$ $\begin{array}{c}\text { Truesdell Brewery Company}\\\text { Partial Balance Sheet}\\\begin{array}{lll}&2017&2016\\\text { Accounts Receivable (net) } & \$ 19,500 & \$ 15,600 \\\text { Merchandise Inventory } & 23,400 & 28,600 \\\text { Accrued Liabilities } & 1,560 & 3,900 \\\text { Accounts Payable (Merchandise Inventory) } & 15,600 & 9,100\end{array}\end{array}$
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 is for purchases of merchandise inventory only.Prepare the operating activities section of the statement of cash flows.

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Definitions:

True Values

The actual, undistorted measures or worth of an item, free from biases or errors.

Oral Auction

A live auction where bids are made through spoken communication amongst bidders.

English Auction

A type of auction where the price ascends with each subsequent bid and the highest bidder wins.

Increasing Bids

The action of progressively raising the price offer in an auction or competitive bidding situation.