Question

Ouyang Inc. reported cost of goods sold for the year of $80 million. There was an increase of $5 million in inventory and an increase of $2 million in A/P. The cash paid to its suppliers during the year is most likely:

$73 million.

$75 million.

$77 million.

$83 million.

$87 million.

Answer 1

Correct answer---------$83 million.

Working

Cash payments to suppliers
Cost of goods sold	$                80.00
Add: Increase in Inventory	$                   5.00
Net purchases	$                85.00
Less: Increase in Accounts payable	$                (2.00)
Cash payments to suppliers	$                83.00