Determining Selected Amounts for Cash Flows from Operating Activities-Direct Method Selected data taken from the accounting records of Ginis Inc. for the current year ended December 31 are as follows: Balance, December 31 Accrued expenses payable (operating expenses) $12,650 Accounts payable (merchandise creditors) B. Inventories 96,140 178,020 7,360 Prepaid expenses During the current year, the cost of goods 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. 2 Cash Flows from Operating ActivitiesDirect Method The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $753,500 and accounts receivable decreased by $48,400 during the year, what was the amount of cash received from customers? b. If income tax expense for the current year was $50,600 and income tax payable decreased by $5,500 during the year, what was the amount of cash payments for income taxes? c. Why is the cash received from customers in (A) different than sales? Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $93,700. Depreciation recorded on store equipment for the year amounted to $31,200. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash Accounts receivable tnet) Inventories 524,100 65,000 $19,700 56,000 50,000 3.000 Prepaid expenses 3.250 23.400 5.300 17,200 6,400 Accounts payable (merchandise creditors) Wages payable a. Prepare the "Cash flows from operating activities" section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and abilities: Net cash flow from operating activities b. Cash flows from operating activities differs from net income because it does not use the of accounting. For example revenues are recorded on the income statement when