Answer and Explanation:
The computation is shown below:
Cash paid for Merchandise
Cost of Goods Sold $620,000
Add: Ending inventory $42,500
Less: Beginning inventory $68,000
Purchases made during the year $594,500
Add: Opening balance of accounts payable $135,000
Less: Ending balance of accounts payable $90,000
Cash paid for Merchandise $639,500
Cash paid for Operating Expenses
Operating expenses $142,000
Add: Ending Prepaid expense $23,000
Less: Beginning prepaid expense $20,000
Add: Beginning balance of accrued expenses $22,000
Less: Ending balance of accrued expenses $29,500
Cash paid for operating expenses $137,500
