The following Income Statement and account balance changes apply to questions 7-10:

Income Statement for the year:

Sales $ 400,000

Cost of Goods Sold 250,000

Gross Profit $ 150,000

Operating Expenses 90,000

Net Income before Taxes $ 60,000

Taxes 8,000

Net Income $ 52,000

Account Balance Changes during the year:

Inventory decrease $25,000

Taxes Payable increase $ 2,000

Prepaid expenses increase $16,000

Accounts Payable for inventory decrease $ 8,000

Accrued liabilities (e.g., Wages Payable) increase $12,000

Accounts Receivable increase $28,000

Depreciation increase $ 8,000

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

a. $344,000 c. $428,000

b. $372,000 d. $400,000

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

a. $267,000 c. $233,000

b. $217,000 d. $283,000

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

a. $54,000 c. $110,000

b. $94,000 d. $86,000

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

a. $6,000 c. $10,000

b. $8,000 d. $12,000