Answer:
The correct answer is option (A).
Explanation:
According to the scenario, the given data are as follows:
Salaries payable at the end of year 1 = $60,000
Salaries payable at the end of year 2 = $90,000
Salary expense in year 2 = $620,000
So, we can calculate the cash outflows for salaries in year 2 by using following formula:
Cash outflow = Salary recorded in year 2 + Salaries payable at the beginning of the year - Salaries payable at the end of year
= $620,000 + $60,000 - $90,000
= $590,000
Hence, the cash outflow for salaries in year 2 is $590,000.
