In its 1996 income statement, Kilm Co. reported cost of goods sold of $450,000. Changes occurred in several balance sheet accounts as follows:Inventory $160,000 decreaseAccounts payable-suppliers 40,000 decreaseWhat amount should Kilm report as cash paid to suppliers in its 1996 cash flow statement, prepared under the direct method? a. $250,000b. $330,000c. $570,000d. $650,000

Question

Amir Ayala

Business

2 May, 01:58

In its 1996 income statement, Kilm Co. reported cost of goods sold of $450,000. Changes occurred in several balance sheet accounts as follows:Inventory $160,000 decreaseAccounts payable-suppliers 40,000 decreaseWhat amount should Kilm report as cash paid to suppliers in its 1996 cash flow statement, prepared under the direct method? a. $250,000b. $330,000c. $570,000d. $650,000

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Caitlin Mendez · Answer 1

b. $330,000

Explanation:

Provided that

Reported cost of good sold = $450,000

Decrease in inventory = $160,000

Decrease in account payable = $40,000

So, The computation of the cash paid to supplier is shown below:

= Cost of goods sold + decrease in account payable - decrease in inventory

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

= $330,000

The decrease in supplies is added while the decrease in inventory is deducted to the cost of goods sold.