Mark Corporation's inventory account increased $26,800 and its accounts payable account (which relates to the purchase of merchandise only_decreased $18,240 during the year.Mark also reported sales of $789,500 and cost of goods sold of $532,700 during the same period.Mark Corporation's payments to suppliers for inventory during the year were:

Question

Quizplus · Accepted Answer

The increase in inventory account indicates that Mark Corporation has purchased more inventory during the year than it has sold, so the company had to pay suppliers for the purchase of the additional inventory. The decrease in accounts payable account indicates that the company has paid off some of its outstanding debts to suppliers for the purchase of merchandise.

To calculate the payments to suppliers, we need to add the decrease in accounts payable to the cost of goods sold, and subtract the increase in inventory from the total.

Payments to suppliers = Cost of goods sold + Decrease in accounts payable - Increase in inventory 
Payments to suppliers = $532,700 + (-$18,240) - $26,800 
Payments to suppliers = $577,740

Therefore, the best choice is B.

Mark Corporation's Inventory Account Increased $26,800 and Its Accounts Payable