Question

Gant Limited reported a $15,000 increase in inventory and a $5,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $150,000. The cash payments made to suppliers were

Answer 1

Answer: $160,000

Explanation: CASH PAYMENT MADE TO SUPPLIER is the amount paid to the supplier for the goods received or purchases.

purchases = Cost of goods sold + increase in inventory.

= 150,000+15,000

= 165,000

but here is also increase in the payable account which means some goods are purchased on credit,

so, cash payment made = total purchases - increase in payable

= 165,000-5,000

= 160,000