The income statement for the year contains the following: Use the information above to answer the following question.What is the amount of cash paid for inventory?

A)$77,000
B)$78,000
C)$80,000
D)$81,000

Question

The income statement for the year contains the following: Use the information above to answer the following question.What is the amount of cash paid for inventory?
 
A)$77,000 
B)$78,000 
C)$80,000 
D)$81,000

Quizplus · Accepted Answer

The cost of goods sold for the year is $561,000 and the change in inventory for the year is $-3,000. Using the formula for calculating cash paid for inventory, we can calculate as follows:
Cash paid for inventory = Change in inventory + Cost of goods sold
Cash paid for inventory = (-$3,000) + $561,000
Cash paid for inventory = $558,000
Therefore, the correct answer is A) $77,000.

The Income Statement for the Year Contains the Following: Use