Question

Selected data taken from the accounting records of Ginis Inc. for the current year ended December 31 are as follows: Balance, December 31 Balance, January 1Accrued expenses payable $12,650 $14,030(operating expenses)Accounts payable 96,140 105,800(merchandise creditors)Inventories 178,020 193,430Prepaid expenses 7,360 8,970During 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.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.

Answer 1

Answer:

Cash payment for merchandise inventory is $1,025,800.00

Cash payment for operating expenses is $179,170.00

Explanation:

The amount of cash payments in respect of merchandise inventory is the cost of merchandise sold minus decrease in inventories plus decrease in accounts payable.

Cash paid for merchandise inventory=$1,031,550-($193,430-$178,020)+($105,800-$96,140)=$1,025,800.00  

Cash paid for operating expenses=$179,400+($14,030-$12,650)-($8,970-$7,360)=$ 179,170.00