Question

The accounting records for the Fox Hollow Company show that its cost of goods sold for the year was $300,000. In addition, it had an increase in inventory of $5,000 and a decrease in accounts payable of $6,000.

As a result under the direct method, the amount of cash paid to suppliers for the year was:

Answer 1

Cash paid will be equal to $311000

Step-by-step explanation:

We have given cost of goods sold = $300000

Increase in inventory = $5000

Decrease in account payable = $6000

We have to find the amount of cash paid to the suppliers.

Amount of cash paid to the suppliers will be equal to

Cash paid = amount of goods sold + increase in inventory + decrease in account payable.

= $300000+$5000+$6000 = $311000

So cash paid will be equal to $311000