Monroe Corporation reported a decrease in inventories of $30,000 and a decrease in accounts payable of $15,000.Cost of goods sold totaled $110,000.Monroe uses the direct method to determine the net cash provided by operating activities on the statement of cash flows.What is the cost of goods sold adjusted to a cash basis?
A)$65,000
B)$105,000
C)$95,000
D)$155,000

Question

Quizplus · Accepted Answer

The cost of goods sold adjusted to a cash basis can be calculated using the following formula: 
Cost of Goods Sold (Cash Basis) = Cost of Goods Sold (Accrual Basis) + Decrease in Inventory - Decrease in Accounts Payable 
Plugging in the given values: 
Cost of Goods Sold (Cash Basis) = $110,000 + (-$30,000) - (-$15,000) 
= $110,000 + $30,000 + $15,000 
= $95,000 
Therefore, the correct answer is (C) $95,000.

Monroe Corporation Reported a Decrease in Inventories of $30,000 and a Decrease