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Cost of goods sold adjusted to a cash basis

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Last year Cummins Company reported a cost of goods sold of $48,600. Inventories increased by $10,000 during the year, and accounts payable increased by $2,000. The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be:

$73,600
$62,600
$56,600
$52,600

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The solution explains how to calculate the cost of goods sold adjusted to a cash basis.

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Cost of Sales 48,600
      +Ending Inventory 10,000 ...

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