Question

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise.

Cost of goods sold $ 240,000 Merchandise inventory, January 1 68,800 Merchandise inventory, December 31 70,000 Accounts payable, January 1 67,000 Accounts payable, December 31 73,800

Answer 1

first let us know merchandise purchases during the year:

cost of goods sold	240,000
add: ending inventory	70,000
	310,000
less:opening inventory	(68,800)
purchases during the year	241,200

now, the amount paid for merchandise:

purchases	241,200
add:opening accounts payable	67,000
less:ending accounts payable	(73,800)
amount of cash paid for merchandise	234,400