Tito 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 $182,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were
A) $182,000.
B) $162,000.
C) $207,000.
D) $157,000.

Question

Quizplus · Accepted Answer

The cash payments to suppliers are calculated by adjusting the Cost of Goods Sold (COGS) for changes in inventory and accounts payable. The formula is: Cash Payments = COGS + Increase in Inventory - Decrease in Accounts Payable = $182,000 + $20,000 + $5,000 = $207,000.

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