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Nash Corporation had January 1 and December 31 balances as follows. 1/1/20 12/31/20 Inventory $114,000 $128,000...

Nash Corporation had January 1 and December 31 balances as follows.

1/1/20

12/31/20
Inventory $114,000 $128,000
Accounts payable 63,000 72,000


For 2020, cost of goods sold was $583,000.

Compute Nash’s 2020 cash payments to suppliers.

Cash payments to suppliers
Business   Accounting   
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Homework Answers

Answer #1

Answer - Cash payments to Suppliers = $588,000

Explanation -

To calculate cash payments to suppliers, first compute purchases for the year.

Beginning Inv + Purchases - COGS = Ending Inventory

$114,000 + purchases - $583,000 = $128,000

Purchases = $597,000

Now formula for cash paid to suppliers

Beginning A/P + Purchases - Cash Paid to Suppliers = Ending A/P

= $63,000 + $597,000 - Cash Paid to Suppliers = $72000

Cash Paid to Suppliers = $63,000 + $597,000 - $72000

Cash Paid to Suppliers = $588,000

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