Question

Selected data taken from the accounting records of Laser Inc. for the current year ended December 31 are as follows:

	Balance December 31	Balance January 1
Accrued operating expenses	$5,590	$6,110
Accounts payable (merchandise creditors)	41,730	46,020
Inventories	77,350	84,110
Prepaid expenses	3,250	3,900

During the current year, the cost of goods sold was $448,500, and the operating expenses other than depreciation were $78,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows.

Required:

Determine the amount reported on the statement of cash flows for:

1. Cash payments for merchandise.
$

2. Cash payments for operating expenses.
$

Answer 1

1)	Cash payments for Merchandise
	cost of goods sold +decrease in accounts payable-decrease in inventory
	cost of goods sold				448,500
	decrease in accounts payable				4290
	Decrease in inventory				-6760
	Cash payment for Merchandise				446,030	answer
2)	Cash payment for operating expense
	operating expense - decrease in prepaid expense +decrease in Accured
	expenses payable
	operatng expense				78,000
	decrease in prepaid expense				-650
	decrease in accrued expenses payable				520
	Cash payment for operating expense				77,870	answer