Cost of goods sold for Richie Corporation during 2014 was $480,000.Beginning inventory was $165,000 and ending inventory was $195,000.Beginning accounts payable was $61,500 and ending accounts payable was $72,000.How much cash was paid to suppliers during 2014?

Question

Quizplus · Accepted Answer

The formula for calculating cash paid to suppliers is:

Cost of Goods Sold + Beginning Inventory - Ending Inventory = Cash paid to suppliers

Substituting the given values, we get:

$480,000 + $165,000 - $195,000 = Cash paid to suppliers
$450,000 = Cash paid to suppliers

However, we need to adjust this figure for changes in accounts payable. The formula for that is:

Cash paid to suppliers - Beginning accounts payable + Ending accounts payable = Total cash paid to suppliers

Substituting the values, we get:

$450,000 - $61,500 + $72,000 = Total cash paid to suppliers
$460,500 = Total cash paid to suppliers

Therefore, the correct answer is option B, $499,500.

Cost of Goods Sold for Richie Corporation During 2014 Was