The following selected account balances appeared on the financial statements of the Washington Company: The Washington Company uses the direct method to calculate net cash flow from operating activities.
Cash paid to suppliers is
A) $39,000
B) $33,000
C) $29,000
D) $23,000

Question

The following selected account balances appeared on the financial statements of the Washington Company:  The Washington Company uses the direct method to calculate net cash flow from operating activities.
Cash paid to suppliers is
A) $39,000 
B) $33,000 
C) $29,000 
D) $23,000

Quizplus · Accepted Answer

To calculate cash paid to suppliers, we need to use the formula: 
Cost of Goods Sold + Increase in Inventory - Decrease in Inventory = Cash Paid to Suppliers

From the given information, we have:

Cost of Goods Sold = $58,000 
Increase in Inventory = $4,000 
Decrease in Accounts Payable = $29,000 - $32,000 = -$3,000

Putting these values into the formula:

Cash Paid to Suppliers = $58,000 + $4,000 - (-$3,000) = $33,000

Therefore, the answer is B.

The Following Selected Account Balances Appeared on the Financial Statements