Question

Dooling Corporation reported balances in the following accounts for the current year: Beginning EndingInventories $600 $300Accounts payable 300 500Cost of goods sold was $7,500. What was the amount of cash paid to suppliers?a. $7,000.b. $7,200.c. $7,300.d. $7,500.

Answer 1

Answer:

a. $7,000

Explanation:

The computation of the  cash paid to suppliers is shown below:

=  Beginning Account payable + Purchase - Ending account payable

where,

The costs of goods sold = Beginning balance of raw material + purchase made - ending balance of raw material

$7,500 = $600 + purchase made - $300

$7,500 = $300 + purchase made

So, the purchase would be

= $7,200

Now the cash paid to suppliers would be

= $300 + $7,200 - $500

= $7,000