Question

ABC Company has the following trial balances on 12/31/20x1 and 12/31/20x0: December 31 20x120x0 Cash35,00032,000 Accounts Receivable22,00018,000 Inventory31,00040,000 Property10,00010,000 Plant and equipment100,00082,000 Accumulated depreciation, plant assets(20,000)(14,000) Accounts Payable(25,000)(15,000) Other current liabilities(6,000)(5,000) Bonds Payable(50,000)(50,000) Common Stock(10,000)(10,000) Retained Earnings(40,000)(30,000) Dividends declared2,0002,000 Sales revenue(200,000)(184,000) Cost of Goods Sold120,000100,000 Selling expenses20,00015,000 General and administrative expenses10,0008,000 Interest Expense10001000 What is the cash outflow for merchandise

Answer 1

Answer and Explanation:

The computation of the cash outflow for merchandise is shown below:

Cost of Goods Sold $120,000

Less: Decrease in Inventory -$9,000

Purchases $111,000

Less: Increase in Accounts Payable -$10,000

Cash paid for Merchandise Inventory $121000

Hence, the cash outflow for merchandise is $121,000

The above format should be applied