Home › ACCA › Financial Accounting › Statement of Cash Flows › Beginning inventory was $80,000, ending inventor…
Beginning inventory was $80,000, ending inventory $112,000, and cost of merchandise sold $94,000. What were inventory purchases for the year?
A$126,000
B$62,000
C$94,000
D$286,000
Answer & Solution
Correct answer: A. $126,000
1. Beginning inventory + purchases − cost of merchandise sold = ending inventory.
2. $80,000 + purchases − $94,000 = $112,000.
3. Purchases = $112,000 − $80,000 + $94,000.
4. = $126,000.
5. Trap: $62,000 (option B) subtracts cost of sales rather than adding it back.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.2.4 "Two-step calculation for cash paid for inventory", p.282_
Related questions
Both the direct and indirect methods are used to prepare which part of the statement of caWages expense was $20,000. Beginning wages payable was $17,000 and ending was $14,000. UndInventory purchases for the year were $126,000. Beginning accounts payable was $22,000 andSales were $174,000. Beginning accounts receivable was $58,000 and ending was $34,000. UndNet cash from operating activities is $46,000, from investing $28,000, and from financing Financing activities show: cash from issuing common stock $20,000; cash to redeem bonds $5A firm reports investing inflows of $99,000 (land) and $90,000 (investments) and an outfloCash dividends payable began the year at $8,000, dividends of $3,000 were declared, and th