Selected data taken from the accounting records of Laser Inc. for the current ye

Question

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

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.
$

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

Explanation / Answer

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

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