The following information is available for K Co. for 2005.
Inventory 1/1/05 130,000
Inventory 12/31/05 120,000
Cost of Goods Sold, 2005 450,000
Accounts Payable 1/1/05 70,000
Accounts Payable 12/31/05 92,000
(A) What amount of cash was paid for the purchase of merchandise?
(B) How will the amount computed in (a) be shown of the statement of cash flows?
A. The cash paid for purchase of merchandise is computed as
Cash payments for inventory:
Cost of Sales 450,000
+Ending Inventory 120,000
This solution explains how to calculate the amount paid for the purchase of merchandise and how it will be shown in the statement of cash flows.