Cash Payments for Merchandise—Direct Method
Cost of merchandise sold reported on the income statement was $145,000. The accounts payable balance increased by $4,000, and the inventory balance increased by $9,000 over the year. Determine the amount of cash paid for merchandise.
Cost of merchandise sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $145,000
Add increase in inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000
Deduct increase in accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . \underline{(4,000)}
Cash paid for merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \underline{\underline{\$ 150,000}}