For the current year A Corporation had a beginning and ending inventory balance
ID: 2582244 • Letter: F
Question
For the current year A Corporation had a beginning and ending inventory balance of $56,000 and $32,000 respectively. A
corporation makes all its inventory purchases on account and has a beginning and ending balance in it’s Accounts Payable
account of $273,000 and $154,000 respectively. The Cost of Goods Sold during the period was $189,000 If A corporation
uses the direct method of reporting cash flows from operating activities, determine the cash payments for inventory for the
period.
a. $284,000
b. $214,000
c. $46,000
d. $332,000
Explanation / Answer
Calculate Cash payment for inventory :
Cash payment inventory = Cost of goods sold- decrease inventory+decrease account payable
= 189000-24000+119000
Cash payment inventory = 284000
so answer is a) $284000