Greene Electric Company uses the direct method to prepare its statement of cash flows.Greene has reported cost of goods sold of $85,000 on its income statement for 2018.If the balance in Accounts Payable,for merchandise inventory suppliers only,has decreased by $8,000 during the year,then $8,000 needs to be subtracted from $85,000 to calculate payments to suppliers for merchandise inventory purchases.

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The balance in Accounts Payable, for merchandise inventory suppliers only, has decreased by $8,000, which means that payments of $8,000 were made to suppliers during the year. Therefore, $8,000 needs to be added to the cost of goods sold of $85,000 to calculate the total amount paid to suppliers for merchandise inventory purchases. The correct calculation is $85,000 + $8,000 = $93,000.

Greene Electric Company Uses the Direct Method to Prepare Its