A company's Inventory balance at 12/31/17 was $188,000 and $200,000 at 12/31/16. Its Accounts Payable balance at 12/31/17 was $84,000 and $80,000 at 12/31/16, and its cost of goods sold for 2017 was $720,000. The company's total amount of cash payments for merchandise in 2017 equals:
A)$704,000.
B)$712,000.
C)$720,000.
D)$728,000.
E)$736,000.

Question

Quizplus · Accepted Answer

The correct answer is A because the total amount of cash payments for merchandise in 2017 is equal to the cost of goods sold for 2017 plus the increase in accounts payable from 12/31/16 to 12/31/17 minus the increase in inventory from 12/31/16 to 12/31/17.

A Company's Inventory Balance at 12/31/17 Was $188,000 and $200,000