Balance,December 31
Balance,
January 1
Accrued expenses payable (operating expenses) $ 12,650 $ 14,030
Accounts payable (merchandise creditors) 96,140 105,800
Inventories 178,020 193,430
Prepaid expenses 7,360 8,970
During the current year, the cost of merchandise sold was $1,031,550, and the operating expenses other than depreciation were $179,400. 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 (a) cash payments for merchandise and (b) cash payments for operating expenses.
Answer:
a. Cost of merchandise sold…………………………………………………………… $1,031,550
Add decrease in accounts payable………………………………………………… 9,660
$1,041,210
Deduct decrease in inventories……………………………………………………… (15,410)
Cash payments for merchandise…………………………………………………… $1,025,800
b. Operating expenses other than depreciation…………………………………… $179,400
Add decrease in accrued expenses payable……………………………………… 1,380
$180,780
Deduct decrease in prepaid expenses……………………………………………… (1,610)
Cash payments for operating expenses…………………………………………… $179,170