Suppose the 2014 income statement for McDonald’s Corporation shows cost of goods sold $5,178.0 million and operating expenses (including depreciation expense of

$1,216.2 million) $10,725.7 million. The comparative balance sheet for the year shows that inventory decreased $5.3 million, prepaid expenses increased $42.2 million, accounts payable (merchandise suppliers) increased $15.6 million, and accrued expenses payable increased $199.8 million.

Instructions Using the direct method, compute

(a) cash payments to suppliers and

(b) cash payments for operating expenses.

AppendixLO1