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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Cash Payments to Suppliers

Blackmon Company reported net income of $805,000 and cost of goods sold of $1,525,000 on its 2019 income statement. In addition, Blackmon reported an increase in inventory of $65,410, a decrease in prepaid insurance of $1 2,800, and a decrease in accounts payable of $43,190.

Required:

Compute the amount of cash payments to suppliers using the direct method.

To determine

Introduction:

An organization pays its providers for stock which it later pitches to client, as speaking to by expense of products sold. These buys of stock structure providers might be either money buy or acknowledge buy, reflected as records payable. To register money paid to provider, it is important to break down stock and records payable records.

To compute:

Compute the amount of cash payments to suppliers using the direct method.

Explanation

Cost of purchase = Cost of goods sold + Increase in inventory

=$1,525,000+$65,410=$1,590,410

Ca

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