In its 2011 income statement, WME reported $440,000 for the cost of goods sold.
ID: 2486931 • Letter: I
Question
In its 2011 income statement, WME reported $440,000 for the cost of goods sold. WME paid inventory suppliers $380,000 in 2011, and its inventory balance decreased by $41,000 during the year. In its reconciliation schedule, WME should show a
A. $19,000 positive adjustment to net income under the indirect method for the decrease in accounts payable.
B. $19,000 negative adjustment to net income under the indirect method for the decrease in accounts payable.
C. $19,000 negative adjustment to net income under the indirect method for the increase in accounts payable.
D. $19,000 positive adjustment to net income under the indirect method for the increase in accounts payable.
Explanation / Answer
A. $19,000 positive adjustment to net income under the indirect method for the decrease in accounts payable.