Question

The financial statements for Ruthman Company show the following: Cost of goods sold: $121,000 Inventory, Beginning Bal: $25,000 Inventory, Ending Bal: $26,000 Accounts Payable, Beginning Bal: $35,000 Accounts Payable, Ending Bal: $33,000 Cash paid for merchandise is _____________.

Answer 1

To find the cash paid for merchandise by Ruthman Company, calculate the Cost of Goods Sold plus the change in Inventory minus the change in Accounts Payable, which gives us $120,000.

Step-by-step explanation:

The student is asking to calculate the cash paid for merchandise by Ruthman Company, using the provided financial statement data. To compute this, we must consider the cost of goods sold, changes in inventory, and changes in accounts payable. The formula to calculate this is:

Cash Paid for Merchandise = Cost of Goods Sold + Increase in Inventory - Decrease in Accounts Payable.

By substituting the values given we have:

Cash Paid for Merchandise = $121,000 + ($26,000 - $25,000) - ($35,000 - $33,000)

Thus, the calculation would be:

Cash Paid for Merchandise = $121,000 + $1,000 - $2,000

Cash Paid for Merchandise = $120,000

The cash paid for merchandise by Ruthman Company is $120,000.