Wellington, Inc. uses the direct method to prepare its statement of cash flows.
ID: 2500920 • Letter: W
Question
Wellington, 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, 2017:
?Wellington, Inc.
Comparative Balance Sheet
December? 31, 2017 and 2016
2017
2016
Increase??
?(Decrease)
Cash
??? $33,700
???? $18,500
?$15,200
Accounts Receivable
???? 27,100
???? 29,300
?2,200
Merchandise Inventory
????? 57,200
???? 30,200
?27,000
?PP&E, net
?126,000
?92,000
?34,000
Total Assets
?$244,000
?$170,000
?$74,000
Accounts Payable
?8,000
???? 12,000
?$(4,000)
Accrued Liabilities
?5,500
???? 1,500
?4,000
Longminus?term
?72,500
?81,500
?$(9,000)
Total Liabilities
?$86,000
?$95,000
?$(9,000)
Common Stock
?$55,000
?$3,000
?$52,000
Retained Earnings
?115,000
?78,000
?37,000
Treasury Stock
?(12,000)
?(6,000)
?(6,000)
Total? Stockholders' Equity
?$158,000
?$75,000
?$83,000
Total Liabilities and? Stockholders' Equity
?$244,000
?$170,000
?$74,000
?Wellington, Inc.
Income Statement
December? 31, 2017
2017
2016
Increase
?(Decrease)
Sales Revenue
???? $289,600
Interest Revenue
????? 2,700
Gain on Sale of Plant Assets
?6,000
Total Revenues and Gains
?$298,300
Cost of Goods Sold
?145,000
Salaries and Wages Expense
?49,700
Expenselong dash—Plant
?16,000
Other Operating Expense
?24,300
Interest Expense
?3,500
Income Tax Expense
?7,800
Total Expenses
?246,300
Net Income
?$52,000
Use the direct method to compute the total cash receipts from operating activities.
A.
?$296,100
B.
?$260,300
C.
?$294,500
D.
?$287,400
?Wellington, Inc.
Comparative Balance Sheet
December? 31, 2017 and 2016
Explanation / Answer
Total cash receipts from operating activities = (289600+2200)+2700= $294500
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