In its year-end income statement, Black Knights Company reported cost of goods sold of $450,000. Changes occurred in several balance sheet accounts during the year as follows: Inventory $160,000 decrease Accounts payable-suppliers 40,000 decrease What amount should the Black Knights Company report as cash paid to suppliers in its cash flow statement, prepared under the direct method?

Question

Giovani Leon

Business

8 January, 00:35

In its year-end income statement, Black Knights Company reported cost of goods sold of $450,000. Changes occurred in several balance sheet accounts during the year as follows: Inventory $160,000 decrease Accounts payable-suppliers 40,000 decrease What amount should the Black Knights Company report as cash paid to suppliers in its cash flow statement, prepared under the direct method?

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Answers (1)

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Ashly · Answer 1

The answer is $330,000

Explanation:

Cash paid to suppliers is the total amount of cash paid to its creditors.

We can find that through:

Cost of sold

Minus: Decrease in inventory

Plus: Decrease in accounts payable

=Cash paid to suppliers.

Now let's start:

Cost of sold - $450,000

Decrease in inventory - $160,000

Decrease in accounts payable - $40,000

$450,000 - $160,000 + $40,000

=$330,000

Therefore, Cash paid to suppliers is $330,000