Workman-Smith Company's comparative balance sheets included inventory of $120,000 on December 31, 2011, and $110,000 on December 31, 2012. Workman-Smith's comparative balance sheets also included accounts payable of $60,000 on December 31, 2011, and $55,000 on December 31, 2012. Workman-Smith's accounts payable balances are composed solely of amounts due to suppliers for purchases of inventory. Cost of goods sold, as reported by Workman-Smith on its 2012 income statement, amounted to $850,000. Required: What is the amount of cash payments for inventory that Workman-Smith should report in the operating activities section of its 2012 statement of cash flows, under the assumption that the direct method is used?
Workman-Smith Company's comparative balance sheets included inventory of $120,000 on December 31, 2011, and $110,000 on December 31, 2012. Workman-Smith's comparative balance sheets also included accounts payable of $60,000 on December 31, 2011, and $55,000 on December 31, 2012. Workman-Smith's accounts payable balances are composed solely of amounts due to suppliers for purchases of inventory. Cost of goods sold, as reported by Workman-Smith on its 2012 income statement, amounted to $850,000. Required: What is the amount of cash payments for inventory that Workman-Smith should report in the operating activities section of its 2012 statement of cash flows, under the assumption that the direct method is used?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Workman-Smith Company's comparative balance sheets included inventory of $120,000 on
December 31, 2011, and $110,000 on December 31, 2012. Workman-Smith's comparative
balance sheets also included accounts payable of $60,000 on December 31, 2011, and $55,000
on December 31, 2012. Workman-Smith's accounts payable balances are composed solely of
amounts due to suppliers for purchases of inventory. Cost of goods sold, as reported by
Workman-Smith on its 2012 income statement, amounted to $850,000.
Required: What is the amount of cash payments for inventory that Workman-Smith should
report in the operating activities section of its 2012 statement of cash flows, under the
assumption that the direct method is used?
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