The following selected account balances were taken from Buckeye Company\'s gener
ID: 2434017 • Letter: T
Question
The following selected account balances were taken from Buckeye Company's general ledger at
January 1, 2005 and December 31, 2005:January 1, 2005 December 31, 2005Inventory 52,000 49,000Accounts payable 40,000 71,000Salaries payable 3,000 9,000Investments 68,000 75,000Accounts receivable 83,000 56,000Land 58,000 88,000Mortgage payable 120,000 95,000Common stock 100,000 180,000Retained earnings 22,000 35,000The following information was taken from Buckeye Company's 2005 income statement:Sales revenue $420,000Cost of goods sold 300,000Salaries expense 94,000Net income $ 26,000Calculate the amount of cash paid to suppliers for purchases of inventory during 2005. Do
not use decimals in your answer.
Explanation / Answer
Inventory A/C O/Bal + Purchases - COGS = C/Bal So Purchases = C/Bal + COGS - O/Bal = 49,000 + 300,000 -52,000 = $297,000
Account Payable O/Bal + Purcahses - Amt paid during Yr = C/Bal So AMount paid during year = O/Bal + Purachses - C/Bal =40,000 + 297,000 - 71000 = $266,000