Cost of merchandise sold for the year was $370,000. Inventories were $34,000 and $80,000 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) $450,000.
B) $416,000.
C) $80,000.
D) $370,000.

Question

Quizplus · Accepted Answer

To calculate the cash payment for merchandise, start with the cost of merchandise sold ($370,000), subtract the beginning inventory ($34,000), and add the ending inventory ($80,000). This gives a total of $416,000.

Cost of Merchandise Sold for the Year Was $370,000