The following selected account balances appeared on the financial statements of

Question

The following selected account balances appeared on the financial statements of the Franklin Company:

The Franklin Company uses the direct method to calculate net cash flow from operating activities. Find the cash payments for merchandise.

Select the correct answer.

Accounts Receivable, Jan. 1 $15,418 Accounts Receivable, Dec. 31 $8,639 Accounts Payable, Jan 1 $5,861 Accounts Payable, Dec. 31 $8,956 Merchandise Inventory, Jan 1 $8,994 Merchandise Inventory, Dec 31 $13,881 Sales $60,633 Cost of Goods Sold $34,291

Explanation / Answer

CASh payment for Merchandise = (ending inventory-beginning inventory+beginnig accounts payable-ending accounts payable) +cost of goods sold.

CAsh Payment = (13881-8994+5861-8956)+34291

CAsh payment = 1792 +34291 = $36083

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