question archive If a company's Cost of Goods Sold is $159,000 for the period, beginning and ending Inventory balances are $18,500 and $13,500, respectively, and the beginning and ending Accounts Payable balances are $21,500 and $8,000, respectively, what is the amount of the cash paid to suppliers?
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If a company's Cost of Goods Sold is $159,000 for the period, beginning and ending Inventory balances are $18,500 and $13,500, respectively, and the beginning and ending Accounts Payable balances are $21,500 and $8,000, respectively, what is the amount of the cash paid to suppliers?
$167,500
Step-by-step explanation
In a bid to ascertain the amount of cash paid to suppliers of inventory in the period under review, the below formula for cash paid to suppliers is readily useful:
cash paid to suppliers=-cost of goods sold+ decrease in inventory/(-increase in inventory)+increase in accounts payable/(-decrease in accounts payable)
cost of goods sold=$159,000
decrease in inventory=$18,500-$13,500=$5,000
decrease in accounts payable= $21,500-$8,000=$13,500
cash paid to suppliers=-$159,000+$5,000-$13,500
cash paid to suppliers=-$167,500(the negative sign shows that it is a cash outflow)