Question

Cash Paid for Merchandise Purchases The cost of merchandise sold for Kohl’s Corporation for a recent year was $12,265 million. The balance sheet showed the following current account balances (in millions): Balance, End of Year Balance, Beginning of Year Merchandise inventories $4,038 $3,814 Accounts payable 1,251 1,511 Determine the amount of cash payments for merchandise.

Answer 1

Answer:

Cash payment for merchandise = $12,749

Explanation:

As we know that:

Opening Inventory + Purchases made during the year - Closing Inventory = Inventory sold during the year

We know, the value of opening, closing and sold inventory we this we can compute the value of inventory purchased during the year.

Putting values we have:

$3,814 + Purchases - $4,038 = $12,265

Purchases = $12,265 + $4,038 - $3,814 = $12,489

Also the equation for calculating the payments shall be:

Opening Accounts Payable + Inventory purchased - Closing Accounts Payable = Cash paid during the year for merchandise.

$1,511 + $12,489 - $1,251 = Cash paid

$12,749 = Cash paid