If 90% of the inventories purchased in 2011 are on account, what\'s the cash pay

Question

If 90% of the inventories purchased in 2011 are on account, what's the cash payment to suppliers?

Dec. 31, 2010 Dec. 31, 2011 Assets Current Assets: Cash and cash equivalents Accounts Receivable, net Inventory Total Current Assets Land Property & Equipment - at cost Less Accumulated depreciation Net Property & Equipment Total Assets Liabilities and Equity Current Liabilities: Accounts payable - trade Interest Payable Total Current Liabilities $52,000 168,000 212,000 432,000 97,000 300,000 (170,000) 130,000 $659,000 $63,000 157,000 214,000 434,000 107,000 333,000 (182,000) 151,000 $692,000 $78,000 8,000 86,000 $83,000 7,000 90,000 Note Payable Common Stock Retained Earnings 100,000 350,000 123,000 80,000 375,000 147,000 $659,000 $692,000 $800,000 Total Liabilities and Stockholders' Equity For year ended December 31, 2011 Revenues Expenses Cost of Goods Sold Wages and Salaries Expense Depreciation Expense Interest Expense Income Tax Expense Total Plus: Gain on Sale of Equipment Net Income 451,800 200,000 48,000 7,200 25,000 (732,000) 6,000 $74,000

Explanation / Answer

Cost of goods sold=Beginning Inventory+Purchases-Ending Inventory Cost of goods sold= $ 451,800.00 Beginning Inventory $ 210,000.00 Ending Inventory $ 214,000.00 Purchases=Cost of goods sold-Beginning Inventory+Ending Inventory=($451800+$214000-$210000) $ 455,800.00 On Account Purchase=($455800*90%) $ 410,220.00 Cash Purchases or amount paid to supplier $    45,580.00

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