Based on the operational data provided below, calculate the net cash paid for inventory during the year:\begin{tabular}{|l|r|}\hline\textbf{Particulars} & \textbf{Amount (Rs.)} \ \hlineInventory at the beginning & 40,000 \ \hlineCredit Purchases & 1,60,000 \ \hlineInventory at the end & 38,000 \ \hlineTrade payables at the beginning & 14,000 \ \hlineTrade payables at the end & 14,500 \ \hline\end{tabular}
- ARs. 1,59,000
- BRs. 1,60,000
- CRs. 1,59,500
- DRs. 1,60,500
Solution & Step-by-step Explanation
To find the actual cash paid for inventory, we need to analyze the changes in Trade Payables, as cash outlays to suppliers depend directly on credit purchases and changes in outstanding payables.Let's set up the Trade Payables ledger calculation:
Substitute the given values into the formula:
(Note: Inventory levels show internal usage rates, but the actual cash paid to external vendors is determined by the Trade Payables balance.)
Substitute the given values into the formula:
(Note: Inventory levels show internal usage rates, but the actual cash paid to external vendors is determined by the Trade Payables balance.)