Cash Payments - Direct Method ??

Question

Lester Enterprises’ comparative balance sheets included inventory of $55,300 at December 31, 2006, and $41,500 at December 31, 2007. Lester’s comparative balance sheets also included accounts payable of $34,500 at December 31, 2006, and $23,000 at December 31, 2007. Lester’s accounts payable balances are composed solely of amounts due to suppliers for purchases of inventory on account. Cost of goods sold, as reported by Lester on its 2007 income statement, amounted to $460,600. What is the amount of cash payments for inventory that Lester will report in the Operating Activities section of its 2007 statement of cash flows assuming that the direct method is used?

Answer 1

COGS:
Beginning inventory 55,300
add Purchases ?
less Ending inventory (41,500)
= COGS 460,600
From the above, you can easily work out purchases to be $446,800

Accounts Payable:
Beginning balance 34,500
add Purchases 446,800 (from above)
less Payments ( ? )
= Ending balance 23,000
From the above you can tell that Cash payments = $458,300