Chapter 21, Problem 21.2E

Determine cash paid to suppliers of merchandise

• LO21–3, LO21–6

Shown below in T-account format are the beginning and ending balances ($ in millions) of both inventory and accounts payable.

Required:

1. Use a T-account analysis to determine the amount of cash paid to suppliers of merchandise during the reporting period if cost of goods sold was $300 million.

2. Prepare a summary entry that represents the net effect of merchandise purchases during the reporting period.