Operating Cash Flows (Direct Method) Calculate the cash flow in each of the following cases: a. Cash paid for advertising: Advertising expense Prepaid advertising, January 1 Prepaid advertising, December 31 Cash Flow $62,000 13,000 15,000 $ 0 b. Cash paid for income taxes: Income tax expense Income tax payable, January 1 Income tax payable, December 31 Cash Flow $31,000 7,100 5,900 $ 0 c. Cash paid for merchandise purchased: Cost of goods sold Inventory, January 1 Inventory, December 31 Accounts payable, January 1 Accounts payable, December 31 Cash Flow $180,000 30,000 24,000 10,000 11,000 $ 0