Asked by Marlon Amador on May 21, 2024
Verified
Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $8,000, and the inventory balance increased by $21,000 over the year. Determine the amount of cash paid for merchandise.
Accounts Payable
Short-term liabilities representing money owed by a company to its creditors for goods and services that have been purchased on credit.
Inventory Balance
The value of all the goods available for sale or use by a business at the end of an accounting period.
- Calculate the cash expenditures for income tax, inventory acquisition, and operational overheads.
- Interpret the effect of changes in accounts receivable, accounts payable, and inventory on cash flows.
Verified Answer
CS
Clément SchelfhoutMay 27, 2024
Final Answer :
Cost of merchandise sold $155,000 Increase in inventories 21,000 Increase in accounts payable (8,000) Cash payments for merchandise $168,000\begin{array}{|l|r|}\hline \text { Cost of merchandise sold } & \$ 155,000 \\\hline \text { Increase in inventories } & 21,000 \\\hline \text { Increase in accounts payable } & (8,000) \\\hline \text { Cash payments for merchandise } & \$ 168,000 \\\hline\end{array} Cost of merchandise sold Increase in inventories Increase in accounts payable Cash payments for merchandise $155,00021,000(8,000)$168,000
Learning Objectives
- Calculate the cash expenditures for income tax, inventory acquisition, and operational overheads.
- Interpret the effect of changes in accounts receivable, accounts payable, and inventory on cash flows.