Bertram, Inc. had a beginning Accounts Payable balances of $400 and $450, respectively. Inventory had beginning and ending balances of $450 and $425, respectively. All inventory purchases are made on account. If cost of goods sold equaled $350, how much cash was spent to purchase inventory?
A)$275
B)$250
C)$400
D)$350

Question

Quizplus · Accepted Answer

The cash spent on inventory is calculated as: Beginning Inventory ($450) + Purchases - Ending Inventory ($425) = Cost of Goods Sold ($350). Purchases = $350 + $425 - $450 = $325. Change in Accounts Payable = Ending Accounts Payable ($450) - Beginning Accounts Payable ($400) = $50. Cash spent = Purchases - Change in Accounts Payable = $325 - $50 = $275.