Colie Company had an increase in inventory of $120,000. The cost of goods sold was $490,000. There was a $30,000 decrease in accounts payable from the prior period. Using the direct method of reporting cash flows from operating activities, what were Colie's cash payments to suppliers?
A) $640,000.
B) $580,000.
C) $370,000.
D) $310,000.

Question

Quizplus · Accepted Answer

To calculate cash payments to suppliers using the direct method, start with the cost of goods sold ($490,000), add the increase in inventory ($120,000), and add the decrease in accounts payable ($30,000). This results in cash payments of $640,000.

Colie Company Had an Increase in Inventory of $120,000