The Merchandise Inventory for Year 1 was $100,000 and for Year 2 was $94,000. The Accounts Payable account for Year 1 was $40,000 and for Year 2 was $42,000. Cost of goods sold for Year 2 was $460,000. What was the total amount for cash payments for merchandise for Year 2?
A) $452,000.
B) $456,000.
C) $448,000.
D) $84,000.
E) $449,000.

Question

Quizplus · Accepted Answer

The cash payments for merchandise can be calculated using the formula: Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold. Rearranging gives Purchases = Cost of Goods Sold + Ending Inventory - Beginning Inventory. Purchases = $460,000 + $94,000 - $100,000 = $454,000. Cash Payments = Purchases + Beginning Accounts Payable - Ending Accounts Payable = $454,000 + $40,000 - $42,000 = $452,000.

The Merchandise Inventory for Year 1 Was $100,000 and for Year