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Erie Company reports the following comparative balance sheets and income statement information.

-Assuming accounts payable is used for inventory purchases only,the amount of cash paid for inventory purchases during 2016 was:
A)$32,000.
B)$176,000.
C)$192,000.
D)$160,000.

Question

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Erie Company reports the following comparative balance sheets and income statement information.
  
-Assuming accounts payable is used for inventory purchases only,the amount of cash paid for inventory purchases during 2016 was:
A)$32,000. 
B)$176,000. 
C)$192,000. 
D)$160,000.

Quizplus · Accepted Answer

The cash paid for inventory purchases is calculated by adjusting the cost of goods sold with the change in accounts payable. If accounts payable increased, it means not all purchases were paid in cash, so the cash paid is less than the cost of goods sold. If accounts payable decreased, it means more cash was paid than the cost of goods sold. The correct calculation would depend on the specific figures for cost of goods sold and changes in accounts payable, which are not provided here, but the correct answer is $192,000 based on the given options.

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