Question

The cost of goods 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 (all owed to merchandise suppliers) 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) 49,000
(D) 53,000

Answer 1

Given:

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

Therefore the correct option is (c).