The Following Information Is Available for Kent Company Year 2

question 37

Essay

The following information is available for Kent Company Year 2.Required:
1) What amount of cash was paid for the purchase of merchandise?
2) How will the above items be shown on the statement of cash flows using the indirect method?
3) How will the amount computed in 1) be shown on the statement of cash flows using the direct method?
$$\begin{array} { | l | r | } \hline \text { Net income, } 2014 & \$ 280,000 \\\hline \text { Inventory, } 1 / 1 / 14 & 300,000 \\\hline \text { Inventory, } 12 / 31 / 14 & 260,000 \\\hline \text { Cost of goods sold, } 2014 & 1,500,000 \\\hline \text { Accounts payable, } 1 / 1 / 14 & 180,000 \\\hline \text { Accounts payable, } 12 / 31 / 14 & 230,000 \\\hline\end{array}$$

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Definitions:

Preponderance of the Evidence

Preponderance of the evidence is the standard of proof in most civil trials, which means that the evidence on one side outweighs, or is more convincing than, the evidence on the other side.

Performance

The action or process of carrying out or accomplishing an action, task, or function.

Properly Payable

Properly payable refers to the condition under which a financial instrument, such as a check, meets all requirements for payment to the rightful party without dispute.

Requirements

Conditions or specifications that must be met or complied with.