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Last year Maine Company reported cost of goods sold of $110,000. Inventories increased by $30,000 during the year, and accounts payable decreased by $15,000. The company uses the direct method to determine the net cash flows from operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be:
a.$155,000.
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Question & Answer: cost of goods sold of $110,000. Inventories increased by $30,000 during the year, and accounts payable decreased b…..
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b.$140,000.
c.$125,000.
d.$65,000.
Expert Answer
The correct answer is a. $ 155,000
Note :
Cost of Goods Sold = $ 110,000
Add: Inventories increased = $ 30,000
Add: accounts payable decreased = $ 15,000
cost of goods sold adjusted to a cash basis = $ 155,000
