Question

The following items were reported on the balance sheets and income statement for Centerton Inc., a service company: Operating expenses payable, December 31, 2015 $ 64,000 Operating expenses payable, December 31, 2016 48,000 Operating expenses (income statement) —2016 170,000 What amount would be reported in the operating activities section of the statement of cash flows for payments for operating expenses under the direct method?

Answer 1

$186,000

Step-by-step explanation:

The computation of the amount that should be reported on the operating activities section of the cash flow statement is shown below:

= Opening balance of operating expense payable + operating expense - closing balance of operating expense payable

= $64,000 + $170,000 - $48,000

= $186,000