Question

Question 4 The following selected account balances were taken from ABC Company's general ledgers for 2019: Inventory Accounts payable Salaries payable Investments Accounts receivable Land Notes payable Unearned revenue Common stock Retained earnings January 1, 2019 74,000 50,000 9,000 68,000 69,000 58,000 195,000 17,000 100,000 23,000 December 31, 2019 56,000 28,000 4,000 75,000 35,000 88,000 120,000 25,000 190,000 63,000 The following information was taken from ABC Company's 2019 income statement: Sales revenue Cost of goods sold Salaries expense Net income $420,000 300,000 68,000 $ 52,000 Calculate the amount of cash paid to suppliers for purchases of inventory during 2019.

Answer 1

Cost of goods sold = $300,000

Beginning inventory = $74,000

Ending inventory = $56,000

Decrease in inventory = Beginning inventory - Ending inventory

= 74,000 - 56,000

= $18,000

Beginning accounts payable = $50,000

Ending accounts payable = $28,000

Decrease in accounts payable = Beginning accounts payable - Ending accounts payable

= 50,000 - 28,000

= $22,000

Cash payment to suppliers = Cost of goods sold - Decrease in inventory + Decrease in accounts payable

= 300,000 - 18,000 + 22,000

= $304,000

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