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6 April, 21:47

In its year-end income statement, Black Knights Company reported cost of goods sold of $450,000. Changes occurred in several balance sheet accounts during the year as follows: Inventory $160,000 decrease Accounts payable-suppliers 40,000 decrease What amount should the Black Knights Company report as cash paid to suppliers in its cash flow statement, prepared under the direct method?

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  1. 7 April, 00:45
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    The answer is $330,000

    Explanation:

    Cash paid to suppliers is the total amount of cash paid to its creditors.

    We can find that through:

    Cost of sold

    Minus: Decrease in inventory

    Plus: Decrease in accounts payable

    =Cash paid to suppliers.

    Now let's start:

    Cost of sold - $450,000

    Decrease in inventory - $160,000

    Decrease in accounts payable - $40,000

    $450,000 - $160,000 + $40,000

    =$330,000

    Therefore, Cash paid to suppliers is $330,000
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