Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $\begin{array} { l }
\text {Cost of goods sold. } &\$226,000\
\text {Merchandise inventory, January 1. } &54,800\
\text {Merchandise inventory, December 31 } &57,400\
\text {Accounts payable, January 1. } &54,400\
\text {Accounts payable, December 31. } &59,800\
\end{array}$

A)$234,000.
B)$220,000.
C)$223,200.
D)$218,000.
E)$228,800.

Question

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $\begin{array} { l  }
 \text {Cost of goods sold. } &\$226,000\
 \text {Merchandise inventory, January 1. } &54,800\
 \text {Merchandise inventory, December 31 } &57,400\
 \text {Accounts payable, January 1. } &54,400\
 \text {Accounts payable, December 31. } &59,800\
\end{array}$

A)$234,000.
B)$220,000.
C)$223,200.
D)$218,000.
E)$228,800.

Quizplus · Accepted Answer

The cash paid for merchandise is equal to the cost of goods sold plus the increase in accounts payable minus the increase in merchandise inventory.Cash paid for merchandise = Cost of goods sold + (Accounts payable, December 31 - Accounts payable, January 1) - (Merchandise inventory, December 31 - Merchandise inventory, January 1)Cash paid for merchandise = $226,000 + ($59,800 - $54,400) - ($57,400 - $54,800)Cash paid for merchandise = $226,000 + $5,400 - $2,600Cash paid for merchandise = $223,200

Use the Following Information About the Current Year's Operations of a Company