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2 March, 18:20

Jump Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for 2017: Cost of Goods Sold, $153,000 Merchandise Inventory, beginning balance, $28,000 Merchandise Inventory, ending balance, $60,000 Accounts Payable, beginning balance, $8,100 Accounts Payable, ending balance, $5,100 Operating expenses, $27,000 Accrued Liabilities, beginning balance, $2,900 Accrued Liabilities, ending balance, $6,000 Use the direct method to compute the cash paid to suppliers. (Accrued Liabilities relate to operating expenses.)

A. $188,000

B. $164,100

C. $163,900

D. $211,900

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  1. 2 March, 18:41
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    A. $188,000

    Explanation:

    We know that

    Cost of goods sold = Opening inventory + Purchase - ending inventory

    where,

    The cost of goods sold is $153,000

    And the opening stock and ending stock would be $28,000 and $60,000 respectively

    So, the purchase amount would be

    $153,000 = $28,000 + Purchase - $60,000

    $153,000 = - $32,000 + Purchase

    So, the purchase = $185,000

    And,

    The cash payment to supplier = Beginning Account payable + Purchase - Ending account payable

    So, the cash payment would be

    = $8,100 + $185,000 - $5,100

    = $188,000
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