Question

In: Accounting

Determine the amount of cash paid for merchandise.

The cost of merchandise sold reported on the income statement was $770,000. The accounts payable balance decreased $44,000, and the inventory balance decreased by $66,000 over the year. Determine the amount of cash paid for merchandise.

Solutions

Expert Solution

Statement of cash flows : It is a financial statement that indicates a company's cash and cash equivalents for a specific time. It computes the net changes in cash by reporting the sources and uses of cash resulting from a company's operating, investing, and financing activities.

Calculation of amount of cash paid for merchandise 

Cash paid for merchandise = Cost of goods sold + Decrease in Accounts payable - Decrease in Inventory

=$770,000 + $44,000 - $66,000

=$748,000

 


Therefore, amount of cash paid for merchandise is $748,000

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