A company's inventory account increased $28,000 and its accounts payable account decreased $19,450 during the year. The accounts payable relates only to the acquisition of inventory. Sales were $790,500 and cost of goods sold was $535,700. What was the amount of payments to suppliers of inventory?

Question

Quizplus · Accepted Answer

The change in inventory ($28,000) plus the cost of goods sold ($535,700) equals the cost of goods available for sale, which is $563,700. To calculate the amount of payments to suppliers of inventory, we need to find the cost of goods purchased, which can be calculated by subtracting the increase in inventory ($28,000) from the cost of goods available for sale ($563,700), and then adding back the decrease in accounts payable ($19,450). So, cost of goods purchased = $563,700 - $28,000 + $19,450 = $555,150.

A Company's Inventory Account Increased $28,000 and Its Accounts Payable