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9 May, 03:47

A company reported cost of goods sold of $1,760,000 for the year.

During the year, inventory increased from a $92,000 beginning balance to a $140,000 ending balance, and accounts payable increased from a $48,000 beginning balance to a $56,000 ending balance.

How much is the cash paid for merchandise purchased during the year?

a) $1,660,000

b) $1,800,000

c) $1,808,000

d) $1,704,000

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Answers (1)
  1. 9 May, 05:09
    0
    Option (B) is correct.

    Explanation:

    Given that,

    cost of goods sold = $1,760,000

    Beginning Inventory = $92,000

    Ending Inventory = $140,000

    Beginning Accounts payable = $48,000

    Ending Accounts payable = $56,000

    Total Purchase:

    = Cost of Goods sold + Ending Inventory - Beginning Inventory

    = $1,760,000 + $140,000 - $92,000

    = $1,808,000

    Cash paid for merchandise purchased:

    = Total Purchase + Beginning Accounts payable - Ending Accounts payable

    = $1,808,000 + $48,000 - $56,000

    = $1,800,000
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