Jump Company Uses the Direct Method to Prepare Its Statement

question 55

Multiple Choice

Jump Company uses the direct method to prepare its statement of cash flows.Refer to the following information reported for 2019: Cost of Goods Sold,$150,000
Merchandise Inventory,beginning balance,$26,000
Merchandise Inventory,ending balance,$64,000
Accounts Payable,beginning balance,$8100
Accounts Payable,ending balance,$5000
Operating expenses,$31,000
Accrued Liabilities,beginning balance,$2500
Accrued Liabilities,ending balance,$6400
Use the direct method to compute the cash paid to suppliers.(Accrued Liabilities relate to operating expenses.)

• A) $162,800
• B) $164,000
• C) $191,100
• D) $218,200

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Definitions:

Note Receivable

A written promise that entitles the holder to receive a specified amount of money at a set date in the future, often bearing interest.

90-Day Note

A short-term debt obligation that matures in 90 days.

Settle Account

The process of paying off or resolving a financial account or obligation.

Percent of Receivables Method

An accounting technique used to estimate the amount of a company's receivables that will not be collected.