Exhibit 12-5
Myers Inc -Refer to Exhibit 12-5

question 7

Multiple Choice

Exhibit 12-5
Myers Inc.uses the indirect method to prepare the statement of cash flows.The following amounts are shown in its December 31,2017,financial statements.
$$\begin{array} { l c c } & \text { December 31, } 2017 & \text { December 31,2016 } \\\hline\text { Accourts receivable } & \$ 442,000 & \$ 502,000 \\\text { Cost of goods sold } & \$ 1,200,000 & \\\text { Sales reveruse } & \$ 1,600,000 & \\\text { Accourts payable } & \$ 170,000 & \$ 210,000 \\\text { Irventory } & \$ 180,000 & \$ 130,000 \\\text { Salaries payable } & \$ 30,000 & \$ 38,000 \\\text { Salaries expense } & \$ 110,000 & \$ 96,000\end{array}$$
-Refer to Exhibit 12-5.How will the change in inventory be reported in the operating activities section of the statement of cash flows?

• A)The increase of $50,000 will be added to cost of goods sold.
• B)The increase of $50,000 will be added to net income.
• C)The increase of $50,000 will be subtracted from net income.
• D)The increase of $50,000 will be subtracted from cost of goods sold.
• E)None of the answer choices is correct.

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