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Consider the following

1 Assume cost of goods sold on an accrual basis is 300,000, accounts payable increased by 20,000, and inventory increased by

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Answer #1

Please follow the below calculations and solution,

  1. Given cost of goods sold = 300,000 that is opening stock + purchases - closing stock = 300,000. Inventory increased by 50,000 that is opening - closing stock = 50,000. Therefore purchases - 50,000 = 300,000. That is purchases = 350,000. Accounts payable increased by 20,000 assuming this 20,000 is increased due to purchases and as a result cash paid for merchandise will be 350,000 - 20,000 = 330,000. Answer is C. 330,000.
  2. payment if debt will be a financing activity, making of loans, collection of loans, sake of held for maturity securities are all related to investments and are investing activities. Therefore d. Payment of debt us the answer.
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