All purchases of inventory are for cash. If inventory at the beginning of the year is $63,000 and at the end $88,000 and the cost of sales is $200,000, the cash paid for inventory purchased for the year is:

Question

Quizplus · Accepted Answer

To find out the cash paid for inventory purchased during the year, we need to use the formula:

Cash paid for inventory = Cost of goods sold + Ending inventory - Beginning inventory

Substituting the given values, we have:

Cash paid for inventory = $200,000 + $88,000 - $63,000 = $225,000

Therefore, the answer is B: $225,000.

All Purchases of Inventory Are for Cash