Ogden Company uses its accounts payable account only for inventory purchases. The following account balances were reported on its financial statements:
$\begin{array}{|l|r|r|}
\hline \text { Accounts }&\text { December } 31,2014&\text { December } 31,2013\
\hline \text { Merchandise inventory } & \$ 70,000 & \$ 66,000 \
\hline \text { Accounts payable } & 68,000 & 65,000 \
\hline \text { Cost of goods sold } & 889,000 & 856,000\\hline
\end{array}$
How much cash did Ogden Company pay to suppliers during 2014?

Question

Quizplus · Accepted Answer

The cash paid to suppliers is calculated as: Beginning Accounts Payable + Purchases - Ending Accounts Payable. Purchases can be calculated as: Ending Inventory + Cost of Goods Sold - Beginning Inventory. Thus, Purchases = $70,000 + $889,000 - $66,000 = $893,000. Cash paid = $65,000 + $893,000 - $68,000 = $890,000.

Ogden Company Uses Its Accounts Payable Account Only for Inventory