Question

A company's inventory balance at 12/31/16 was $191,600 and $204,000 at 12/31/15. its accounts payable balance at 12/31/16 was $88,000 and $83,600 at 12/31/15, and its cost of goods sold for 2016 was $724,000. the company's total amount of cash payments for merchandise in 2016 equals:

Answer 1

Company
Dec. 31. 2016
Assets
Cash- $191,600

Dec. 31. 2015
Assets
Cash- $204,000

Goods sold for 2016- $724,000

Liabilities
Dec. 31.2016
Accounts Payable- $88,000

Liabilities
Dec. 31. 2015
Accounts payable- $83,600

In order to find the company's total amount of cash payments for 2016, you find the minus the previous assets with the new assets..
Ex. $191,600 - $204,000 = -12,400

Then minus your answer with Goods Sold in 2016
Ex. $724,000 - $12,400 = $711,600

Then, minus the pervious amount of Accounts payable with the new Accounts Payable
Ex. $88,000 - $83,600 = $4,400

New payments for 2016-
Ex. Add $88,000 + $83,600 = $171,600

Then, $171,600 - $4,400 = $167,200

Thus, $167,200 equals the company's total amount of cash payments 2016.