Operating Cash Flows (Direct Method) Calculate the cash flow in each of the following cases: a. Cash paid for advertising: Advertising expense $62,000 Prepaid advertising, January 1 13,000 Prepaid advertising, December 31 15,000 Cash Flow Answer b. Cash paid for income taxes: Income tax expense $31,000 Income tax payable, January 1 7,100 Income tax payable, December 31 5,900 Cash Flow Answer c. Cash paid for merchandise purchased: Cost of goods sold $180,000 Inventory, January 1 30,000 Inventory, December 31 24,000 Accounts payable, January 1 10,000 Accounts payable, December 31 11,000 Cash Flow Answer