Cost of merchandise sold for the year was $850,000.Inventories were $60,000 and $120,000 at the beginning and end of the year,respectively.There were no changes in accounts payable from the beginning to the end of the year.Cash payment for merchandise to be reported on the cash flow statement using the direct method is:
A)$850,000.
B)$910,000.
C)$940,000.
D)$880,000.

Question

Quizplus · Accepted Answer

The cash payment for merchandise is calculated as: Cost of Merchandise Sold + Increase in Inventory = $850,000 + ($120,000 - $60,000) = $910,000.

Cost of Merchandise Sold for the Year Was $850,000