the year to the end of the year. What is Newton's cash payment to suppliers for inventory? Ritory of $75,000. The cost of goods sold for OA $294.000 B. $276.000 OC. $285,000 OD. $219,000
the year to the end of the year. What is Newton's cash payment to suppliers for inventory? Ritory of $75,000. The cost of goods sold for OA $294.000 B. $276.000 OC. $285,000 OD. $219,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Question: Calculating Cash Payment to Suppliers for Inventory**
Newton Corporation reported an increase in inventory of $75,000. The cost of goods sold for the year was $210,000. There was also a $9,000 decrease in accounts payable from the beginning of the year to the end of the year. What is Newton’s cash payment to suppliers for inventory?
**Options:**
- A. $294,000
- B. $276,000
- C. $325,000
- D. $219,000
**Explanation of the Question:**
This problem is asking you to calculate the cash payment made to suppliers for inventory by Newton Corporation. You need to account for:
1. The cost of goods sold (COGS)
2. The change in inventory
3. The change in accounts payable
To find the cash payment to suppliers, use the following formula:
\[ \text{Cash Payment to Suppliers} = \text{Cost of Goods Sold} + \text{Increase in Inventory} - \text{Decrease in Accounts Payable} \]
Based on the provided data:
- Increase in Inventory: $75,000
- Cost of Goods Sold: $210,000
- Decrease in Accounts Payable: $9,000
Substitute these values into the formula:
\[ \text{Cash Payment to Suppliers} = \$210,000 + \$75,000 - \$9,000 \]
\[ \text{Cash Payment to Suppliers} = \$285,000 - \$9,000 \]
\[ \text{Cash Payment to Suppliers} = \$276,000 \]
Therefore, the correct answer is option B: $276,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F18d7602f-9f25-445c-bda8-4d38e99e2d82%2F8f5248eb-466e-4760-a2b0-4eee458efd76%2Fncjscln_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Question: Calculating Cash Payment to Suppliers for Inventory**
Newton Corporation reported an increase in inventory of $75,000. The cost of goods sold for the year was $210,000. There was also a $9,000 decrease in accounts payable from the beginning of the year to the end of the year. What is Newton’s cash payment to suppliers for inventory?
**Options:**
- A. $294,000
- B. $276,000
- C. $325,000
- D. $219,000
**Explanation of the Question:**
This problem is asking you to calculate the cash payment made to suppliers for inventory by Newton Corporation. You need to account for:
1. The cost of goods sold (COGS)
2. The change in inventory
3. The change in accounts payable
To find the cash payment to suppliers, use the following formula:
\[ \text{Cash Payment to Suppliers} = \text{Cost of Goods Sold} + \text{Increase in Inventory} - \text{Decrease in Accounts Payable} \]
Based on the provided data:
- Increase in Inventory: $75,000
- Cost of Goods Sold: $210,000
- Decrease in Accounts Payable: $9,000
Substitute these values into the formula:
\[ \text{Cash Payment to Suppliers} = \$210,000 + \$75,000 - \$9,000 \]
\[ \text{Cash Payment to Suppliers} = \$285,000 - \$9,000 \]
\[ \text{Cash Payment to Suppliers} = \$276,000 \]
Therefore, the correct answer is option B: $276,000.
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