Power Locker reported sales revenue of $ 1,750,000 and cost of goods sold of $ 992,000 on the income statement. The company also reported an increase in inventory of $ 15,000 when compared to prior year. Under the direct method, Power Locker would report cash payments to supplier in the amount of

Question

Quizplus · Accepted Answer

The cash payments to suppliers under the direct method is calculated as the cost of goods sold plus the increase in inventory: $992,000 + $15,000 = $1,007,000.

Power Locker Reported Sales Revenue of $ 1,750,000 and Cost