Question

he following information was taken from the 2018 financial statements of Jenny Gardner Corporation: Inventory, January 1, 2018 $ 180,000 Inventory, December 31, 2018 240,000 Accounts payable, January 1, 2018 150,000 Accounts payable, December 31, 2018 240,000 Sales revenue 1,200,000 Cost of goods sold 800,000 If the direct method is used in the 2018 statement of cash flows, what amount should Jenny Gardner report as cash payments to suppliers

Answer 1

$770,000

Step-by-step explanation:

Purchase = Ending inventory +Cost of goods sold- Beginning inventory Purchased

= $240,000+$800,000-$180,000= $860,000

Cash paid to suppliers = Beginning AP+ Purchased -Ending AP Cash Payments

= $150,000+$860,000-$240,000 =

$770,000

Therefore the amount that Jenny Gardner should report as cash payments to suppliers is $770,000