Question

The cost of goods sold during the year was $50,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable (all owed to merchandise suppliers) were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total ________ .

Answer 1

$49,000

Step-by-step explanation:

Cost of goods sold for the year = $50,000

Opening Inventory = $12,500

Closing inventory = $10,500

Opening Accounts Payable = $6,000

Closing accounts Payable = $5,000

Purchases = Cost of goods sold + Closing Inventory - Opening Inventory

= $50,000 + $10,500 - $12,500 = $48,000

Total payment to Accounts Payable For inventory

= Opening + Purchases - Closing = $6,000 + $48,000 - $5,000 = $49,000

Correct answer

$49,000