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17 September, 04:15

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 merchandise 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; and

(2) Cash payments for operating expenses.

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Answers (1)
  1. 17 September, 05:49
    0
    1. Cash payments for merchandise is $446,030

    2. Cash payment for operating expense is $77,870

    Explanation:

    1. In order to calculate the Cash payments for Merchandise we would have to use the following formula:

    Cash payments for Merchandise = cost of goods sold + decrease in accounts payable-decrease in inventory

    Cash payments for Merchandise=$448,500+$4,290-$6,760

    Cash payment for Merchandise=$446,030

    2. In order to calculate the Cash payments for operating expenses we would have to use the following formula:

    Cash payment for operating expense=operating expense - decrease in prepaid expense + decrease in Accured

    Cash payment for operating expense=$78,000 - $650+$520

    Cash payment for operating expense=$77,870
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