# The cost of merchandise sold for Kohlâ€™s Corporation for a recent year was $12,265 million. The balance sheet showed the following current account balances (in millions): Determine the amount of cash payments for merchandise. BuyFindarrow_forward ### Financial Accounting 15th Edition Carl Warren + 2 others Publisher: Cengage Learning ISBN: 9781337272124 #### Solutions Chapter Section BuyFindarrow_forward ### Financial Accounting 15th Edition Carl Warren + 2 others Publisher: Cengage Learning ISBN: 9781337272124 Chapter 16, Problem 20E Textbook Problem 33 views ## The cost of merchandise sold for Kohlâ€™s Corporation for a recent year was$12,265 million. The balance sheet showed the following current account balances (in millions):Determine the amount of cash payments for merchandise.

To determine

Determine the amount of cash paid for merchandise.

### Explanation of Solution

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

The below table shows the way of calculation of cash flows from operating activities:

 Cash flows from operating activities (Direct method) Â Add: Cash receipts. Cash receipt from customer Â Less: Cash payments: To supplier For operating expenses Income tax expenses Net cash provided from or used by operating activities

Cash payments for purchase represents the total amount of cash paid for the purchase as well as to the accounts payable.

Therefore, the amount of cash paid for merchandise is \$12,749...

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