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Tracy company reports the following in its statement of cash flows:
Net Income$1,000
Depreciation and Amortization350
Decrease (Increase) in Accounts receivable(10)
Decrease (increase) in inventory200
Decrease (increase) in prepaid expenses80
Increase (decrease) in trade payables(300)
Increase (decrease) in taxes payable75
Cash Flow from operations1,395
If Tracy shows cost of goods sold of $2,050 on its income statement, cash paid to suppliers is ________.
Suggested Answer: D
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27 comments · newest first
RO
Rose
3 months ago
So, $2,050 + $300? That makes it $2,350 cash paid to suppliers.
RO
Romana
3 months ago
Right! COGS is $2,050, then add the decrease in payables.
SC
Scarlet
3 months ago
Yeah, start with COGS and adjust for payables.
CH
Cherelle
3 months ago
I think it's tricky. Need to calculate cash paid to suppliers.
ST
Stephane
3 months ago
COGS of $2,050 + increase in inventory $200 - decrease in payables $300.
ER
Erasmo
5 months ago
Really? That seems high for COGS.
DA
Daniela
5 months ago
Totally agree, the math checks out!
MI
Mitsue
5 months ago
Wait, how did you get that?
PA
Paris
5 months ago
Cash paid to suppliers is $2,300.
LI
Lizette
6 months ago
Wait, wait, wait... did someone say "basic accounting 101"? I thought this was a certification exam, not a kindergarten class! But hey, if the answer is $2,260, I'm all for it. The decrease in inventory makes sense, so let's go with that.
MY
My
6 months ago
$2,260? That's a no-brainer! The decrease in inventory of $200 means that $200 less was paid to suppliers, so the total cash paid must be the cost of goods sold ($2,050) plus the decrease in inventory ($200). It's like basic accounting 101, folks!
TR
Trinidad
6 months ago
Hmm, let me think about this. If the decrease in inventory is $200, that means $200 less was paid to suppliers. So the total cash paid to suppliers must be the cost of goods sold ($2,050) plus the decrease in inventory ($200), which is $2,260. Easy peasy!
HA
Hassie
6 months ago
$2,260 seems like the correct answer. The decrease in inventory of $200 means that $200 less was paid to suppliers, so the total cash paid must be the cost of goods sold ($2,050) plus the decrease in inventory ($200).
LO
Louis
6 months ago
I think the answer is $2,260. The decrease in inventory of $200 means that $200 less was paid to suppliers, so the total cash paid must be the cost of goods sold ($2,050) plus the decrease in inventory ($200).
SI
Simona
6 months ago
The cash paid to suppliers is $2,260. The decrease in inventory of $200 means that $200 less was paid to suppliers, so the total cash paid to suppliers must be the cost of goods sold ($2,050) plus the decrease in inventory ($200).
ST
Stevie
7 months ago
I recall that cash paid to suppliers is COGS plus any changes in inventory and payables, but I’m not confident about how to handle the signs for each adjustment.
EM
Emerson
7 months ago
Wait, does the decrease in trade payables mean we should add that amount back to COGS? I feel like I mixed that up in my last practice exam.
LU
Lucina
8 months ago
I think we need to take COGS and add the increase in inventory while subtracting the increase in trade payables. That sounds familiar from practice questions.
JO
Joanna
8 months ago
I remember we calculated cash paid to suppliers by adjusting COGS for changes in inventory and payables, but I'm not entirely sure about the exact formula.
HE
Heike
8 months ago
I've got this! The key is to remember that cash paid to suppliers is equal to the cost of goods sold, plus the increase in inventory, minus the increase in accounts payable. I'll work through the numbers step-by-step.
EL
Elli
8 months ago
This is a good opportunity to demonstrate my understanding of the cash flow statement. I think I can solve this by starting with the cost of goods sold and then adjusting for the changes in inventory and accounts payable.
SA
Sabra
8 months ago
Hmm, I'm a bit confused on how to approach this. I know I need to use the cost of goods sold and the changes in working capital accounts, but I'm not sure of the exact formula. I'll have to review my notes.
LU
Lucina
8 months ago
Okay, let me see if I can work this out. I'll need to use the information from the cash flow statement and the cost of goods sold to figure out the cash paid to suppliers.
WH
Whitney
9 months ago
This looks like a straightforward cash flow question, but I'll need to think through the calculations carefully to get the right answer.
BE
Beatriz
2 months ago
Don't forget to add back the depreciation too!
RO
Roxane
2 months ago
Right! COGS minus the change in trade payables.
AM
Amber
3 months ago
I think we need to calculate cash paid to suppliers using COGS.