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the cost of goods sold during the year was $50,000. inventories were $9,500 and $15,000 at the beginning and end of the year, respectively. accounts payable were $6,800 and $10,800 at the beginning and end of the year, respectively. using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

Respuesta :

using the direct method of reporting cash flows from operating activities, cash payments for merchandise total is 49,000

opening inventory = 12,500

closing stock = 10,500

COGS = 50,000

Purchase = COGS + closing inventory - opening inventory = 48,000

Accounts payable:

Opening balance = 6000

Purchases = 48,000

closing balance = 5000

Payments = (Opening balance of accounts payable + purchases - closing balance of accounts payable)

= 49,000

the direct method of reporting cash flows:

Either the direct approach or the indirect technique can be used to calculate the cash flow from activities for a certain time period.

Changes in cash receipts and payments are tracked by the cash flow direct method and reported in the cash flow from operations section.

The inferred cash flow is calculated using the indirect approach, which adds or subtracts changes in the asset and liability accounts from the net income earned over a given period.

Although it takes longer, the direct technique for the statement of cash flows gives more information on the operating cash flow accounts.

To know more about the direct method of reporting cash flows:

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