The cost of goods sold during the year was ¥2,050,000. Merchandise inventory decreased by ¥60,000 during the year and accounts payable decreased by ¥30,000 during the year. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

Question

Quizplus · Accepted Answer

The calculation for cash payments for merchandise using the direct method is:
Cost of goods sold + Increase in inventory - Decrease in accounts payable
= ¥2,050,000 - (-¥60,000) - (-¥30,000)
= ¥2,020,000

The Cost of Goods Sold During the Year Was ¥2,050,000