A company reported cost of goods sold of $440,000 for the year. During the year,

Question

A company reported cost of goods sold   of $440,000 for the year.  During   the year, inventory increased from a $23,000 beginning balance to a $35,000   ending balance, and accounts payable increased from a $12,000 beginning   balance to a $14,000 ending balance.   How much is the cash paid for merchandise purchased during the year?

A)

$430,000

B)

$426,000

C)

$452,000

D)

$450,000

  

A company reported cost of goods sold   of $440,000 for the year.  During   the year, inventory increased from a $23,000 beginning balance to a $35,000   ending balance, and accounts payable increased from a $12,000 beginning   balance to a $14,000 ending balance.   How much is the cash paid for merchandise purchased during the year?

  

  

A)

     

$430,000

  

  

B)

     

$426,000

  

  

C)

     

$452,000

  

  

D)

     

$450,000

   A company reported cost of goods sold of $440,000 for the year. During the year, inventory increased from a $23,000 beginning balance to a $35,000 ending balance, and accounts payable increased from a $12,000 beginning balance to a $14,000 ending balance. How much is the cash paid for merchandise purchased during the year?

Explanation / Answer

D)

$450,000

-correct answer

Net income = $440000

Inventory increase =$35000- $23000= $12000

Account payable increase = 14000-12000 = $2000

So, Cash Paid = Net income + Inventory increase - Account payable increase
= $450000

D)

$450,000

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