The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable (all owed to merchandise suppliers) were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

Question

Quizplus · Accepted Answer

Purchases during the year = Ending inventory + Cost of goods sold during the year - Beginning inventory = $10,500 + $50,000 - $12,500 = $48,000
Cash payments for merchandise = Beginning accounts payable + Purchases during the year - Ending accounts payable = $6,000 + $48,000 - $5,000 = $49,000

The Cost of Merchandise Sold During the Year Was $50,000