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cost of goods sold totals for a company, with the inventory beginning balance being an atory ending balance being . The company has no accounts payable.Using the direct method, calculate the adjustment for cash payments made for inventory.a) b) c) d)
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Q. cost of goods sold totals for a company, with the inventory beginning balance being an atory ending balance being . The company has no accounts payable.Using the direct method, calculate the adjustment for cash payments made for inventory.a) b) c) d)
- Understand Inventory Components: Understand the components involved in calculating cash payments for inventory.We have the following information:- Cost of Goods Sold (COGS): - Inventory Beginning Balance: - Inventory Ending Balance: - No accounts payable, which means all inventory purchases are paid in cash.To calculate cash payments for inventory, we need to adjust the Cost of Goods Sold by the change in inventory levels.
- Calculate Inventory Change: Calculate the change in inventory levels. Change in Inventory = Inventory Ending Balance - Inventory Beginning Balance Change in Inventory = Change in Inventory = This means that the inventory increased by over the period.
- Calculate Cash Payments: Calculate the cash payments made for inventory.Cash Payments for Inventory = Cost of Goods Sold + Increase in InventoryCash Payments for Inventory = + Cash Payments for Inventory = This is the amount of cash that was paid for inventory purchases during the period.
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