Boone Inc. reports the following: $\begin{array}{lrr}&\text { End of Year }&\text { Beginning of Year }\
\text { Inventory } & \$ 25,000 & \$ 40,000 \
\text { Accounts Payable } & 30,000 & 10,000
\end{array}$ If cost of goods sold for the year is $150,000, the amount of cash paid to suppliers is
A) $155,000.
B) $145,000.
C) $115,000.
D) $185,000.

Question

Quizplus · Accepted Answer

To calculate the amount of cash paid to suppliers, we use the formula: Cash Paid to Suppliers = Cost of Goods Sold + Increase (or Decrease) in Inventory + Increase (or Decrease) in Accounts Payable. Here, Cost of Goods Sold = $150,000, Inventory decreased by $15,000 ($40,000 - $25,000), and Accounts Payable increased by $20,000 ($30,000 - $10,000). Thus, Cash Paid to Suppliers = $150,000 - $15,000 + $20,000 = $155,000.

Boone Inc Reports the Following If Cost of Goods Sold for the Year Is $150,000