Question

The following selected account balances appeared on the financial statements of the Franklin Company. Use these balances to answer the question that follows. Accounts Receivable, Jan. 1 $14,197 Accounts Receivable, Dec. 31 7,990 Accounts Payable, Jan. 1 4,130 Accounts Payable, Dec. 31 7,939 Inventory, Jan. 1 9,383 Inventory, Dec. 31 14,964 Sales 67,123 Cost of Goods Sold 31,651 The Franklin Company uses the direct method to calculate net cash flow from operating activities. Assume that all accounts payable are owed to merchandise suppliers. Find the cash payments for merchandise. Select the correct answer.

$31,651

$32,277

$34,049

$33,423

Answer 1

Particulars	Amount
Inventory closing balance	14,964
Add cost of goods sold	31,651
Inventory available for sale	46,615
Less opening balance	9,383
Inventory purchases	37,232
Accounts payable opening balance	4,130
Add inventory purchases	37,232
Less Accounts payable closing balance	7,939
Payment for puchases	33,423

Correct option is 33,423

*Hope the above explanation helps, please comment if further explanation is required. Your rating is appreciated*