$54,000 is owed to suppliers for inventory purchases at the beginning of the year and $44,000 is owed at the end of the year. If annual credit purchases of inventory are $160,000, the cash paid to suppliers for the year is:

Question

Quizplus · Accepted Answer

To find the cash paid to suppliers, we need to calculate the total credit purchases and adjust for changes in accounts payable. 
Total credit purchases = $160,000 
Change in accounts payable = $44,000 (end of year balance) - $54,000 (beginning of year balance) = -$10,000 (a decrease) 
Cash paid to suppliers = Total credit purchases - Decrease in accounts payable 
Cash paid to suppliers = $160,000 - (-$10,000) = $170,000 
Therefore, the answer is D ($170,000).

$54,000 Is Owed to Suppliers for Inventory Purchases at the Beginning