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

question 139

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|r|l|} \hline\text { Sales Revenue } & \$ 289,600 & \\ \hline \text { Interest Revenue } & 2700 & \\ \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 } & 49,700 \\ \hline \text { Depreciation Expense - Plant Assets } & 16,000 \\ \hline \text { Other Operating Expense } & 24,300 \\ \hline\text { Interest Expense } & 3,500 \\ \hline \text { Income Tax Expense } & 7,800 \\ \hline \text { Total Expenses } &&246,300\\ \hline\text { Net Income }&&\$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) $197,000 B) $177,500 C) $19,500 D) $201,000$ $\begin{array}{c}\text {Tanglewood, Inc.}\\\text {Income Statement}\\\text {December 31,2018}\\\begin{array}{|l|r|l|}\hline\text { Sales Revenue } & \$ 289,600 & \\\hline \text { Interest Revenue } & 2700 & \\\hline \text { Gain on Sale of Plant Assets } & 6,000 & \\\hline \text { Total Revenues and Gains } & & \$ 298,300\\\hline\text { Cost of Goods Sold } & 145,000 \\\hline \text { Salaries and Wages Expense } & 49,700 \\\hline \text { Depreciation Expense - Plant Assets } & 16,000 \\\hline \text { Other Operating Expense } & 24,300 \\\hline\text { Interest Expense } & 3,500 \\\hline \text { Income Tax Expense } & 7,800 \\\hline \text { Total Expenses } &&246,300\\\hline\text { Net Income }&&\$52,000\\\hline\end{array}\end{array}$ 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:

Perfect Tender Rule

A principle in the Uniform Commercial Code allowing a buyer to demand a full compliance with the contract terms for goods.

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, designed to standardize and simplify the laws across the states.

Valid Title

A legal term indicating that a title to a piece of property is legally effective, with the holder having rightful ownership and no claims or outstanding liens against the property.

Clarify

To make a statement or situation less confused and more comprehensible.