Effects of Transactions Involving Inventories on the Statement of Cash Flows—Direct Method Masthead Company’s comparative balance sheets included inventory of $180,400 at December 31, 2009, and $241,200 at December 31, 2010. Masthead’s comparative balance sheets also included accounts payable of $85,400 at December 31, 2009, and

$78,400 at December 31, 2010. Masthead’s accounts payable balances are composed solely of amounts due to suppliers for purchases of inventory on account. Cost of goods sold, as reported by Masthead on its 2010 income statement, amounted to $1,200,000.

Required What is the amount of cash payments for inventory that Masthead will report in the Operating Activities category of its 2010 statement of cash fl ows assuming that the direct method is used?

AppendixLO1