During the Year, Marigold Corp Reported an Increase in Merchandise

question 66

Multiple Choice

During the year, Marigold Corp reported an increase in Merchandise Inventory of $25,000. Cost of goods sold for the year was $150,000, and there was an $8,000 decrease in Accounts Payable. What were the cash payments to suppliers during the year?

• A)$117,000
• B)$133,000
• C)$167,000
• D)$183,000

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Definitions:

Sales Warranty Accrual Method

An accounting method where a company estimates the cost of warranty claims expected to arise from current sales and records this as an expense when the sale occurs.

Warranty Expense

The estimated cost of honoring product warranties, which companies recognize to match expenses with related revenues.

Estimated Warranty Costs

Projected expenses that a company expects to incur to repair or replace products during a warranty period.

Estimated Liability

A financial obligation that is expected to occur but has not been finalized in amount or timing.