Selected Data for the Current Year Ended December 31 Are

question 76

Short Answer

Selected data for the current year ended December 31 are as follows:
During the current year, the cost of merchandise sold was $620,000 and the operating expenses other than depreciation were $142,000.  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
(b) cash payments for operating expenses

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Definitions:

Selling Expenses

Costs incurred directly and indirectly from the sale of goods or services, such as advertising, shipping, and sales staff salaries.

Perpetual Inventory System

An inventory management system where inventory levels are updated in real-time with each sale or purchase.

Periodic Inventory System

An inventory management system where the inventory count is conducted at specific intervals to determine the cost of goods sold.

Discount Period

The time frame in which a discount is offered for prompt payment of an invoice, encouraging early payment by customers.