Pittsburgh Company pays cash for all inventory purchases.The company had a beginning inventory of $18,500 and an ending inventory of $16,900.Their cost of goods sold amounted to $75,000.Based on this information,the amount of cash paid for inventory purchases was:

Question

Quizplus · Accepted Answer

To calculate the cash paid for inventory purchases, we need to use the formula:

Cash Paid for Inventory Purchases = Beginning Inventory + Purchases - Ending Inventory

We are given the beginning inventory as $18,500, and the ending inventory as $16,900. We need to find the purchases to calculate the cash paid.

To find the purchases, we can use the formula:

Purchases = Cost of Goods Sold + Ending Inventory – Beginning Inventory

We are given the cost of goods sold as $75,000. Substituting the values we get:

Purchases = $75,000 + $16,900 - $18,500 = $73,400

Now, substituting the values for beginning inventory, ending inventory, and purchases in the first formula we get:

Cash Paid for Inventory Purchases = $18,500 + $73,400 - $16,900 = $75,000

Therefore, the amount of cash paid for inventory purchases is $73,400. Hence, the answer is B.

Pittsburgh Company Pays Cash for All Inventory Purchases