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A company's Inventory balance at the end of the year was $204,200 and $218,000 at the beginning of the year. Its Accounts Payable balance at the end of the year was $102,000 and $96,200 at the beginning of the year, and its cost of goods sold for the year was $738,000. The company's total amount of cash payments for merchandise during the year equals:

a $738,000.
b $746,000.
c $757,600.
d $718,400.

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Answer:

b $746,000

Explanation:

the amount purchased in year = cost of good sold + Inventory at beginning - Inventory at end  = $738,000 + $218,000 - $204,200 = $751,800

The cash payments for merchandise during the year = Account Payable (AP) at beginning - AP at end + Amount purchased in year = $96,200 - $102,000 + $751,800 = $746,000

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