Question

Use the following information about the current year operations of a company to calculate the cash paid for merchandise. cost of goods sold $ 241,000 merchandise inventory, january 1 69,800 merchandise inventory, december 31 70,900 accounts payable, january 1 67,900 accounts payable, december 31 74,800?

Answer 1

The cash paid for merchandise is calculated by adjusting the Cost of Goods Sold for the changes in inventory and accounts payable. In this scenario, the cash paid is $235,200.

Step-by-step explanation:

To calculate the cash paid for merchandise, we need to adjust the Cost of Goods Sold (COGS) for the change in

inventory and the change in accounts payable. The formula for this calculation taking into account the given data is:

Beginning Inventory + Purchases – Ending Inventory = COGS

Purchases = COGS + Ending Inventory – Beginning Inventory

Purchases = $241,000 + $70,900 – $69,800 = $242,100

Next, to calculate the cash paid for merchandise, we consider the change in accounts payable:

Cash Paid for Merchandise = Purchases + Beginning Accounts Payable – Ending Accounts Payable

Cash Paid for Merchandise = $242,100 + $67,900 – $74,800 = $235,200

The merchandise balance is reflected by the COGS and inventory changes, and the current account balance is demonstrated by the cash paid for merchandise adjusted for changes in accounts payable.