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13 January, 07:41

A company's Inventory balance at 12/31/16 was $188,000 and $200,000 at 12/31/15. Its Accounts Payable balance at 12/31/16 was $84,000 and $80,000 at 12/31/15, and its cost of goods sold for 2016 was $720,000. The company's total amount of cash payments for merchandise in 2016 equals: a. $720,000. b. $728,000. c. $712,000. d. $704,000. e. $736,000.

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  1. 13 January, 10:18
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    d. $704,000

    Explanation:

    The computation of the cash payment for merchandise is shown below:

    = Opening balance of accounts payable + purchase made - closing balance of accounts payable

    where,

    Purchase = Cost of goods sold + closing balance of inventory - opening balance of inventory

    = $720,000 + $188,000 - $200,000

    = $708,000

    The other items values would remain the same

    Now put these values to the above formula

    So, the value would equal to

    = $80,000 + $708,000 - $84,000

    = $704,000
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