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5 March, 14:24

The accounting records for the Fox Hollow Company show that its cost of goods sold for the year was $300,000. In addition, it had an increase in inventory of $5,000 and a decrease in accounts payable of $6,000.

As a result under the direct method, the amount of cash paid to suppliers for the year was:

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  1. 5 March, 16:37
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    Cash paid will be equal to $311000

    Explanation:

    We have given cost of goods sold = $300000

    Increase in inventory = $5000

    Decrease in account payable = $6000

    We have to find the amount of cash paid to the suppliers.

    Amount of cash paid to the suppliers will be equal to

    Cash paid = amount of goods sold + increase in inventory + decrease in account payable.

    = $300000+$5000+$6000 = $311000

    So cash paid will be equal to $311000
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