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

To determine the amount reported on the statement of cash flows for cash payments for merchandise, add the change in inventories to the cost of merchandise sold. To determine the amount reported on the statement of cash flows for cash payments for operating expenses, add the change in accrued expenses payable to the operating expenses.

Step-by-step explanation:

To determine the amount reported on the statement of cash flows for cash payments for merchandise, we need to calculate the change in inventories during the year. The change in inventories can be calculated by subtracting the balance of inventories at the end of the year from the balance of inventories at the beginning of the year.

In this case, the change in inventories is $193,430 - $178,020 = $15,410. Since the cost of merchandise sold is $1,031,550, the cash payments for merchandise can be calculated by adding the change in inventories to the cost of merchandise sold:

$1,031,550 + $15,410 = $1,046,960

To determine the amount reported on the statement of cash flows for cash payments for operating expenses, we need to calculate the change in accrued expenses payable during the year. The change in accrued expenses payable can be calculated by subtracting the balance of accrued expenses payable at the end of the year from the balance of accrued expenses payable at the beginning of the year.

In this case, the change in accrued expenses payable is $12,650 - $14,030 = -$1,380. Since the operating expenses other than depreciation are $179,400, the cash payments for operating expenses can be calculated by adding the change in accrued expenses payable to the operating expenses: $179,400 + (-$1,380) = $178,020

Answer 2

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

Cash payment for operating expenses is $179,170.00

Step-by-step 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