Williams Corporation reported Cost of Goods Sold of $950,000 for December 31,2017.Accounts payable on the balance sheet were $65,000 for December 31,2016 and $58,000 for December 31,2017.Merchandise Inventory was $82,000 for December 31,2016 and $96,000 for December 31,2017.Cash paid for purchases during 2017 was ________.

Question

Quizplus · Accepted Answer

To find cash paid for purchases, use the formula: Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold. Rearrange to find Purchases: Purchases = COGS + Ending Inventory - Beginning Inventory. Then adjust for changes in Accounts Payable: Cash Paid = Purchases + Beginning Accounts Payable - Ending Accounts Payable. Calculating: Purchases = $950,000 + $96,000 - $82,000 = $964,000. Cash Paid = $964,000 + $65,000 - $58,000 = $971,000.

Williams Corporation Reported Cost of Goods Sold of $950,000 for December