The financial statements for World Company show the following: Cost of goods sold, $725,000. $\begin{array}{lrr}&\text { Beginning Balance }&\text { Ending Balance }\
\text { Merchandise Inventory } & \$ 45,000 & \$ 56,000 \
\text { Accounts Receivable } & 53,000 & 50,000 \
\text { Accounts Pavable } & 37,000 & 42,000
\end{array}$ How much cash was paid to suppliers?
A) $731,000.
B) $736,000.
C)$719,000.
D)$714,000.

Question

Quizplus · Accepted Answer

The correct answer is A. The cash paid to suppliers can be calculated using the following formula:Cash paid to suppliers = Cost of goods sold + Beginning merchandise inventory - Ending merchandise inventory - Increase in accounts payable + Decrease in accounts receivableCash paid to suppliers = $725,000 + $45,000 - $56,000 - ($42,000 - $37,000) + ($53,000 - $50,000)Cash paid to suppliers = $731,000

The Financial Statements for World Company Show the Following: Cost