1.

The following Income Statement and account balance changes apply to this question:

Income Statement for the year:

Sales $1,400,000

Cost of Goods Sold 810,000

Gross Profit $590,000

Operating Expenses 360,000

Net Income before Taxes $230,000

Taxes 34,000

Net Income $196,000

Account Balance Changes during the year:

Accounts Payable increase $6,000

Prepaid expenses decrease $4,500

Taxes Payable increase $8,200

Accounts Receivable decrease $24,000

Additions to Accumulated Depreciation $76,000

Inventory increase $12,000

Accrued liabilities (e.g., Wages Payable) decrease $5,000

1. What were cash receipts from sales for the year, using the direct method?

		a. $1,412,000.
		b. $1,388,000.
		c. $1,424,000.
		d. $1,376,000.

2.

What was the amount of cash payments for operating expenses this year, using the direct method?

		a. $283,500
		b. $284,500
		c. $274,500
		d. $293,500

3. (15)

What was the amount of cash payments for taxes this year, using the direct method?

		a. $25,800
		b. $51,200
		c. $20,800
		d. $34,800

4. (20)

What was the amount of cash payments made during the year for inventory purchases, using the direct method?

		a. $822,000.
		b. $804,000
		c. $828,000.
		d. $816,000.