Bent Company reports a $20,000 increase in inventory and a $5,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $190,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were
A) $190,000.
B) $205,000.
C) $215,000.
D) $175,000.

Question

Quizplus · Accepted Answer

Using the direct method, cash payments made to suppliers can be calculated as follows:

Cost of Goods Sold
+ Increase in Inventory
- Decrease in Accounts Payable
= Cash payments made to suppliers

$190,000
+ $20,000
- $5,000
= $215,000

Therefore, the correct answer is choice C, $215,000.

Bent Company Reports a $20,000 Increase in Inventory and a $5,000