Mei Company uses the direct method to prepare its statement of cash flows

Question

Refer to the following information reported for 2017:

Cost of Goods Sold, $150,000
Merchandise Inventory, beginning balance, $26,000
Merchandise Inventory, ending balance, $64,000
Accounts Payable, beginning balance, $8,100
Accounts Payable, ending balance, $5,000
Operating expenses, $31,000
Accrued Liabilities, beginning balance, $2,500
Accrued Liabilities, ending balance, $6,400

Use the direct method to compute the cash paid to suppliers. (Accrued Liabilities relate to operating expenses.)
A) $162,800
B) $164,000
C) $191,100
D) $218,200

Answer 1

D .D)
Merchandise Inventory, ending balance $64,000
Add: Cost of Goods Sold 150,000
Less: Merchandise Inventory, beginning balance (26,000 )
Purchases 188,000
Add: Accounts Payable, beginning balance 8,100
Less: Accounts Payable, ending balance (5,000 )
Cash paid for merchandise inventory $191,100

Accrued Liabilities, beginning balance $2,500
Add: Operating expenses 31,000
Less: Accrued Liabilities, ending balance (6,400 )
Cash paid for operating expenses 27,100
Total amount paid to suppliers $218,200