Jump Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for 2017: Cost of Goods Sold, $153,000 Merchandise Inventory, beginning balance, $28,000 Merchandise Inventory, ending balance, $60,000 Accounts Payable, beginning balance, $8,100 Accounts Payable, ending balance, $5,100 Operating expenses, $27,000 Accrued Liabilities, beginning balance, $2,900 Accrued Liabilities, ending balance, $6,000 Use the direct method to compute the cash paid to suppliers. (Accrued Liabilities relate to operating expenses.)

A. $188,000

B. $164,100

C. $163,900

D. $211,900

Question

Business

Precious Riddle

12 May, 00:38

Jump Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for 2017: Cost of Goods Sold, $153,000 Merchandise Inventory, beginning balance, $28,000 Merchandise Inventory, ending balance, $60,000 Accounts Payable, beginning balance, $8,100 Accounts Payable, ending balance, $5,100 Operating expenses, $27,000 Accrued Liabilities, beginning balance, $2,900 Accrued Liabilities, ending balance, $6,000 Use the direct method to compute the cash paid to suppliers. (Accrued Liabilities relate to operating expenses.)

A. $188,000

B. $164,100

C. $163,900

D. $211,900

+2

Answers (1)

Know the Answer?

Michaela Shea · Answer 1

A. $188,000

Explanation:

We know that

Cost of goods sold = Opening inventory + Purchase - ending inventory

where,

The cost of goods sold is $153,000

And the opening stock and ending stock would be $28,000 and $60,000 respectively

So, the purchase amount would be

$153,000 = $28,000 + Purchase - $60,000

$153,000 = - $32,000 + Purchase

So, the purchase = $185,000

And,

The cash payment to supplier = Beginning Account payable + Purchase - Ending account payable

So, the cash payment would be

= $8,100 + $185,000 - $5,100

= $188,000