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Cash payments to suppliers

# Cash payments to suppliers - . ....

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Cash payments to suppliers.  This represents the amount paid by the company for merchandise it  plans to sell to its customers. It takes a two-step calculation to determine the cash payments to  suppliers of \$71,976. First, the \$107 increase in the inventory account is added to the amount of cost  of goods sold—found on the income statement—of \$70,950 to get \$71,057 as the cost of goods  purchased. An increase in inventory means a company purchased more than it sold. Because the  amount paid for merchandise includes what was sold as well as what still remains on hand in  inventory to be sold, the change in inventory effects the cash payments to suppliers. To determine  the amount that has actually been paid for the merchandise purchased, a second step is needed.  The decrease in accounts payable of \$919 is then added to the amount of the purchases of \$71,057

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