The financial statements of Oriental Company provide the following information for the current year:
$\begin{array}{|l|r|r|}
\hline & \text { Dec.31 } &{\text { Jan.1 }} \
\hline \text { Accounts receivable } & \$ 35,000 & \$ 40,000 \
\hline \text { Inventory } & \$ 55,000 & \$ 51,000 \
\hline \text { Prepaid expenses } & \$ 12,000 & \$ 14,000 \\hline \text { Accounts payable (for merchandise) } & \$ 33,000 & \$ 32,000 \
\hline \text { Accrued expenses payable } & \$ 15,000 & \$ 20,000 \
\hline \text { Net sales } & \$ 260,000 & \\hline \text { Cost of goods sold } & \$ 130,000 \
\hline \text { Operating expenses (including depreciation of } \$ 18,000) & \$ 80,000 \
\hline
\end{array}$

-Compute the amount of Oriental Company's cash payments for operating expenses.

Question

The financial statements of Oriental Company provide the following information for the current year:
 $\begin{array}{|l|r|r|}
\hline & \text { Dec.31 } &{\text { Jan.1 }} \
\hline \text { Accounts receivable } & \$ 35,000 & \$ 40,000 \
\hline \text { Inventory } & \$ 55,000 & \$ 51,000 \
\hline \text { Prepaid expenses } & \$ 12,000 & \$ 14,000 \\hline \text { Accounts payable (for merchandise) } & \$ 33,000 & \$ 32,000 \
\hline \text { Accrued expenses payable } & \$ 15,000 & \$ 20,000 \
\hline \text { Net sales } & \$ 260,000 & \\hline \text { Cost of goods sold } & \$ 130,000 \
\hline \text { Operating expenses (including depreciation of } \$ 18,000) & \$ 80,000 \
\hline
\end{array}$

-Compute the amount of Oriental Company's cash payments for operating expenses.

Quizplus · Accepted Answer

To find cash payments for operating expenses, adjust operating expenses for changes in prepaid expenses and accrued expenses payable: $80,000 (operating expenses) - $2,000 (decrease in prepaid expenses) - $5,000 (decrease in accrued expenses payable) = $65,000.

The Financial Statements of Oriental Company Provide the Following Information