Question

A review of Elisa Company's financial statements reveals the following information: cost of goods sold: $200,000; increase in inventory: $10,000; increase in accounts payable: $20,000. Cash paid to suppliers was:

Answer 1

Answer:

Cash paid to suppliers was = $190,000

Explanation:

Under the cash flow statement direct method,

Cash paid to supplier = Cost of goods sold + Increase in inventory - Increase in Accounts payable (1)

or, Cash paid to supplier = Cost of goods sold - Decrease in inventory + Decrease in Accounts payable (2)

Given,

Cost of goods sold = $200,000

Increase in inventory = $10,000

Increase in Accounts payable = $20,000

Putting the value in the 1st formula,

Cash paid to supplier = $200,000 + $10,000 - $20,000

Cash paid to supplier = $190,000