Question

The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total:___________.
a. $47,000
b. $51,000
c. $53,000
d. $49,000

Answer 1

Answer:

D

Explanation:

Cost of goods sold = $50,000

Merchandise inventories (beginning) = $12,500

Merchandise inventories (end) = $10,500

Accounts payable (beginning) = $6,000

Accounts payable (end) = $5,000

50,000 + 10500 -12500 = 48000

48,000 + 6000 - 5000 = 49000

Therefore the answer is $49,000