Asked by Frank Milosevics on Jul 17, 2024
Verified
Ale Company reports a $16000 increase in inventory and a $8000 increase in accounts payable during the year. Cost of Goods Sold for the year was $150000. The cash payments made to suppliers were
A) $150000.
B) $158000.
C) $126000.
D) $174000.
Accounts Payable
Accounts payable is the balance of money owed to suppliers or creditors for goods or services purchased on credit, which is typically a short-term liability.
Inventory Increase
A rise in the total value or amount of goods held by a company intended for sale or production.
Cost of Goods Sold
The direct costs associated with producing goods sold by a business, including materials and labor.
- Conduct an analysis to identify payments made to suppliers, considering changes in inventory and differences in accounts payable.
Verified Answer
Adjusted COGS = COGS + Increase in Inventory
Adjusted COGS = $150,000 + $16,000
Adjusted COGS = $166,000
Cash Payments Made to Suppliers = Adjusted COGS + Increase in Accounts Payable
Cash Payments Made to Suppliers = $166,000 + $8,000
Cash Payments Made to Suppliers = $174,000
Therefore, the correct answer is B) $158,000.
Learning Objectives
- Conduct an analysis to identify payments made to suppliers, considering changes in inventory and differences in accounts payable.
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