Bates Company pays cash for all inventory purchases.Bates reports that it had a beginning inventory of $2,500 and an ending inventory of $900.Its cost of goods sold was cost of goods sold equaled $5,500.Based on this information,the amount of cash paid for inventory purchases was:

Question

Quizplus · Accepted Answer

Beginning balance + Cash outflow to purchase inventory - Cost of goods sold = Ending balance
$2,500 + Cash outflow to purchase inventory - $5,500 = $900
Cash outflow to purchase inventory = $900 - $2,500 + $5,500 = $3,900

Bates Company Pays Cash for All Inventory Purchases