During the financial year, Cresswell Limited had cost of sales of €260 000. Opening and closing balances of inventory and trade payables are shown below:
$\begin{array} { l c c }
& \text { Opening balance } & \text { Closing balance } \
\text { Inventory } & € 46,000 & € 55,000 \
\text { Trade Payables } & € 18,000 & € 26,000
\end{array}$
A discount of €2000 for prompt payment was received. The amount of cash paid for goods purchased during the year was:
A) €259 000;
B) €263 000;
C) €275 000;
D) €279 000.

Question

During the financial year, Cresswell Limited had cost of sales of €260 000. Opening and closing balances of inventory and trade payables are shown below: 
$\begin{array} { l c c } 
& \text { Opening balance } & \text { Closing balance } \
> \text { Inventory } & € 46,000 & € 55,000 \
> \text { Trade Payables } & € 18,000 & € 26,000
\end{array}$
A discount of €2000 for prompt payment was received. The amount of cash paid for goods purchased during the year was:
A) €259 000;
B) €263 000;
C) €275 000;
D) €279 000.

Quizplus · Accepted Answer

The amount of cash paid for goods purchased during the year is equal to the cost of sales plus the increase in trade payables minus the discount received.Cost of sales = €260,000Increase in trade payables = €26,000 - €18,000 = €8,000Discount received = €2,000Cash paid for goods purchased = €260,000 + €8,000 - €2,000 = €266,000

During the Financial Year, Cresswell Limited Had Cost of Sales