Merchandise Inventory increased $28,000 and Accounts Payable decreased $19,700 during the year. Accounts Payable relates only to the acquisition of merchandise inventory. Sales were $795,600 and Cost of Goods Sold was $549,700. Compute the payment made to the suppliers for inventory.

Question

Quizplus · Accepted Answer

The payment made to suppliers for inventory can be calculated by starting with the Cost of Goods Sold (COGS) and adjusting it for the change in inventory and accounts payable. The formula is: Payments to Suppliers = COGS + Increase in Inventory - Decrease in Accounts Payable. Plugging in the given numbers: $549,700 (COGS) + $28,000 (Increase in Inventory) - (-$19,700) (Decrease in Accounts Payable, which is added because the payable decreased, meaning more cash was paid out). This equals $597,400.

Merchandise Inventory Increased $28,000 and Accounts Payable Decreased $19,700 During