Reference no: EM132903523

Question -

Part 1: The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

a. $47,000

b. $51,000

c. $53,000

d. $49,000

Part 2: Sales for the year were $600,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively. Cash received from customers to be reported on the statement of cash flows using the direct method is

a. $620,000

b. $600,000

c. $580,000

d. $700,000

Part 3: Income tax was $175,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the statement of cash flows using the direct method is

a. $175,000

b. $215,000

c. $205,000

d. $165,000