Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $\begin{array}{c}
\begin{array}{|l|}
\hline \text {Cost of goods sold.}\
\hline \text {Merchandise inventory, January 1}\
\hline \text {Merchandise inventory, December 31}\
\hline \text {Accounts payable, January 1}\
\hline \text {Accounts payable, December 31}\
\hline
\end{array}
\begin{array}{r|}
\hline\$ 735,000 \
\hline84700 \
\hline82,400 \
\hline54,500\
\hline60,200\
\hline
\end{array}
\end{array}$

A) $727,000.
B) $726,300.
C) $732,700.
D) $737,300.
E) $737,700.

Question

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $\begin{array}{c}
\begin{array}{|l|}
\hline \text {Cost of goods sold.}\
\hline \text {Merchandise inventory, January 1}\
\hline \text {Merchandise inventory, December 31}\
\hline \text {Accounts payable, January 1}\
\hline \text {Accounts payable, December 31}\
\hline
\end{array}
\begin{array}{r|}
\hline\$ 735,000 \
\hline84700 \
\hline82,400 \
\hline54,500\
\hline60,200\
\hline 
\end{array}
\end{array}$

A) $727,000.
B) $726,300.
C) $732,700.
D) $737,300.
E) $737,700.

Quizplus · Accepted Answer

The cash paid for merchandise is calculated as the cost of goods sold plus the increase in accounts payable minus the decrease in merchandise inventory. In this case, the cost of goods sold is $735,000, the increase in accounts payable is $60,200 - $54,500 = $5,700, and the decrease in merchandise inventory is $84,700 - $82,400 = $2,300. Therefore, the cash paid for merchandise is $735,000 + $5,700 - $2,300 = $738,400.

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