During the financial year, Cresswell Limited had a cost of sales amounting to $260 000. Beginning and ending balances of balance sheet related accounts were:
Beginning balance Ending balance
$\blacktriangleright$Inventory $46 000 $55 000
$\blacktriangleright$Accounts Payable $18 000 $26 000
A discount of $2000 for prompt payment was received. The amount of cash paid for goods purchased during the year was:

Question

Quizplus · Accepted Answer

Cost of sales = Beginning inventory + Purchases - Ending inventory$260,000 = $46,000 + Purchases - $55,000Purchases = $260,000 + $55,000 - $46,000Purchases = $269,000Accounts payable increased by $26,000 - $18,000 = $8,000Cash paid for goods purchased = Purchases - Increase in accounts payableCash paid for goods purchased = $269,000 - $8,000Cash paid for goods purchased = $261,000Discount received = $2,000Cash paid for goods purchased net of discount = $261,000 - $2,000Cash paid for goods purchased net of discount = $259,000

During the Financial Year, Cresswell Limited Had a Cost of Sales