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Determining Selected Amounts for Cash Flows from Operating Activities—Direct Method Selected data taken from the accounting...

Determining Selected Amounts for Cash Flows from Operating Activities—Direct Method Selected data taken from the accounting records of Lachgar Inc. for the current year ended December 31 are as follows: Balance, December 31 Balance, January 1 Accrued expenses payable (operating expenses) $5,530 $6,040 Accounts payable (merchandise creditors) 36,000 39,730 Inventories 67,070 72,900 Prepaid expenses 3,190 3,830 During the current year, the cost of merchandise sold was $377,600, and the operating expenses other than depreciation were $76,600. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows.

a. Determine the amount reported on the statement of cash flows for cash payments for merchandise.

b. Determine the amount reported on the statement of cash flows for cash payments for operating expenses.

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Answer #1

Answer:

a. Determine the amount reported on the statement of cash flows for cash payments for merchandise.

Cash payment for purchase of Merchandise = Cost of goods sold-Decrease in any inventory + Decrease in accounts payable

= 377600-(72900-6770)+(39730-36000

Cash payment for purchase of Merchandise = $375500

b. Determine the amount reported on the statement of cash flows for cash payments for operating expenses.

Cash payment for operating expenses = Operating expenses-Decrease in prepaid expenses+Decrease in accurred payments

=76600-(3830-3190)+(6040-5530)

Cash payment for operating expenses =$76470

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