Shown below in T-account format are the beginning and ending balances (S in mill

Question

Shown below in T-account format are the beginning and ending balances (S in millions) of both inventony and accounts payable. Inventory 140.0 143.2 Beginning balance Ending balance Accounts Payable 44.0 Beginning balance 49.0 Ending balance Required: 1. Use a T-account analysis to determine the amount of cash paid to suppliers of merchandise during the reporting period if cost of goods sold was $340 million. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Cash paid to suppliers million 2. Prepare a summary entry that represents the net effect of merchandise purchases during the reporting period. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). If no entry is required for a transactionlevent, select "No journal entry required in the first account field.)

Explanation / Answer

1.

Cash paid to suppliers

= Beginning accounts payable + Purchases - Ending accounts payable

= Beginning accounts payable + (Ending inventory + Cost of goods sold - Beginning inventory) - Ending accounts payable

= $44 + ($143.2 + $340 - $140) - $49

= $338.2

2.

The entry will be prepared as follows:

Account Titles and Explanations Debit Credit Merchandise Inventory ($143.2 + $340 - $140) 343.2       Accounts Payable 343.2

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