Choice "B" is correct. $298,000 cash paid to suppliers under the direct method.
COGS
$ 270,000
Increase in inventory
15,000
Decrease in accounts payable
13,000
$ 298,000
The increase in inventory is added to cost of goods sold because an inventory increase means net purchases of inventory, which results in a cash outflow to suppliers. The decrease in AP is also added because AP decreases when cash payments are made to suppliers.
