Question

A company's Inventory balance at the end of the year was $203,300 and $217,000 at at the beginning of the year. Its Accounts Payable balance at the end of the year was $101,000 and $95,300 at the beginning of the year, and its cost of goods sold for the year was $737,000. The company's total amount of cash payments for merchandise during the year equals:

Answer 1

The answer is $745,000

Step-by-step explanation:

Inventory: Closing balance - opening balance

$203,300 - $217,000

=$13,700$13,700

Inventory increased by $13,700

For accounts payable

$101,000 - $95,300

$5,700

Accounts payable increased by $5,700

Amount of cash paid is

Cost of goods sold + increase in inventory - increase in accounts payable

$737,000 + $13,700 - $5,700

=$745,000