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Cost of goods sold amounted to $403,000, accounts payable increased by $20,400, and inventories...

Question:

Cost of goods sold amounted to $403,000, accounts payable increased by $20,400, and inventories increased by $15,400. How much cash was paid to suppliers?

The net book value of buildings increased by $228,000. No buildings were sold, and depreciation expense for the year was $197,000. How much cash was paid to purchase buildings?

Cash Flow Statement:

The cash flow statement shows how the company spent its cash in the different activities of operating, investing and financing. It can be prepared through direct and indirect methods.

Answer and Explanation:

Cost of goods sold amounted to $403,000, accounts payable increased by $20,400, and inventories increased by $15,400. How much cash was paid to suppliers?

Cash Paid to Suppliers = Cost of Goods Sold + Increase in Inventory - Increase in Accounts Payable

Cash Paid to Suppliers = $403,000 + $15,400 - $20,400

Cash Paid to Suppliers = $398,000


Cost of goods sold + increase in inventory represents purchases


The net book value of buildings increased by $228,000. No buildings were sold, and depreciation expense for the year was $197,000. How much cash was paid to purchase buildings?

Cash Paid to Purchase Buildings = Increase in Net Book Value of Buildings + Depreciation Expense

Cash Paid to Purchase Buildings = $228,000 + $197,000

Cash Paid to Purchase Buildings = $425,000


Learn more about this topic:

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Using the Statement of Cash Flows for Decision Making

from Accounting 101: Financial Accounting

Chapter 12 / Lesson 5
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