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15 September, 13:25

Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $8,000, and the inventory balance increased by $21,000 over the year. Determine the amount of cash paid for merchandise.

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  1. 15 September, 14:12
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    Cash paid 168,000

    Explanation:

    Assuming that there were no inventory at start of the year

    purchases during the year:

    Sold = 155

    Closing inventory = 21

    Total purchase (155+21) = 176

    Cash paid for merchandise = total purchase - increase in liability

    Cash paid = 176-8 = 168
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