Question

Jump Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for​ 2017: Cost of Goods​ Sold, $153,000 Merchandise​ Inventory, beginning​balance, $28,000 Merchandise​ Inventory, ending​ balance, $60,000 Accounts​ Payable, beginning​ balance, $8,100 Accounts​ Payable, ending​ balance, $5,100 Operating​ expenses, $27,000 Accrued​Liabilities, beginning​ balance, $2,900 Accrued​ Liabilities, ending​ balance, $6,000 Use the direct method to compute the cash paid to suppliers.​ (Accrued Liabilities relate to operating​expenses.)

A. ​$188,000
B. ​$164,100
C. ​$163,900
D. ​$211,900

Answer 1

Answer:

A. ​$188,000

Explanation:

We know that

Cost of goods sold = Opening inventory + Purchase - ending inventory

where,  

The cost of goods sold is $153,000

And the opening stock and ending stock would be $28,000 and $60,000 respectively

So, the purchase amount would be

$153,000 = $28,000 + Purchase - $60,000

$153,000 = -$32,000 + Purchase

So, the purchase = $185,000

And,  

The cash payment to supplier = Beginning Account payable + Purchase - Ending account payable  

So, the cash payment would be

= $8,100 + $185,000 - $5,100

= $188,000