Brad Ford Company reports a $48,000 increase in inventory and a $12,000 increase in accounts payable during the year. Cost of goods sold for the year was $285,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Question

Quizplus · Accepted Answer

The cash payments to suppliers can be calculated by adjusting the cost of goods sold for changes in inventory and accounts payable. The formula is: Cash Payments = Cost of Goods Sold + Increase in Inventory - Increase in Accounts Payable. Therefore, $285,000 + $48,000 - $12,000 = $321,000.

Brad Ford Company Reports a $48,000 Increase in Inventory and a $12,000