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Selected data for the current year ended December 31 are as follows:
Balance Balance
December 31 January 1
Accrued expenses (operating expenses) $29,500 $22,000
Accounts payable (merchandise creditors) 90,000 135,000
Inventories 42,500 68,000
Prepaid expenses 23,000 20,000
During the current year, the cost of merchandise sold was $620,000 and the operating expenses other than depreciation were $142,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows.
Determine the amount reported on the statement of cash flows for the following:
Cash payments for merchandise:
Cash payments for operating expenses

Respuesta :

Answer and Explanation:

The computation is shown below:

Cash paid for Merchandise

Cost of Goods Sold $620,000

Add: Ending inventory $42,500

Less: Beginning inventory $68,000

Purchases made during the year $594,500

Add: Opening balance of accounts payable $135,000

Less: Ending balance of  accounts payable $90,000

Cash paid for Merchandise $639,500

Cash paid for Operating Expenses

Operating expenses $142,000

Add: Ending Prepaid expense $23,000

Less: Beginning prepaid expense $20,000

Add: Beginning balance of accrued expenses $22,000

Less: Ending  balance of accrued expenses $29,500

Cash paid for operating expenses $137,500    

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