Chapter 13, Problem 13.11E

Suppose a recent income statement for McDonald’s Corporation shows cost of goods sold $4,852.7 million and operating expenses (including depreciation expense of 51,201 million) $10,671.5 million. The comparative balance sheet for the year shows that inventory increased $18.1 million, prepaid expenses increased $56.3 million, accounts payable (merchandise suppliers) increased $136.9 million, and accrued expenses payable increased $160.9 million.

Instructions

Using the direct method, compute (a) cash payments to suppliers and (b) cash payments for operating expenses.