Question

LaRoe Lawns' inventory increased during the year by $4.2 million. Its accounts payable increased by $5.2 million during the same period. Required: What is the amount of cash LaRoe paid to suppliers of merchandise during the reporting period if its cost of goods sold was $39 million? Prepare a summary entry that represents the net effect of merchandise purchases during the reporting period. Complete this question by entering your answers in the tabs below. Cash Paid General Journal What is the amount of cash LaRoe paid to suppliers of merchandise during the reporting period if its cost of goods sold was $39 million? (Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Cash $ 38.0 million Cash Paid General Journal >

Answer 1

Answer

Merchandise purchase = Cost of goods sold + increase in inventory

= $ 39 million+ $ 4.2 million = $ 43.2 million

Cash paid to suppliers = Purchase - Increase in account payable

= $ 43.2 million - $ 5.2 million = 38 million

Journal entry;

Event	General journal	Debit($)	Credit($)
1	Cost of goods sold	39 million
	Inventory	4.2 million
	To Accounts payable		5.2 million
	Cash		38 million