In this case the requirement is Cash Disbursement (Cash Payments), The gross margin is 40% so the Cost of Goods Sold is 60% From Sales (2,400,000*60%=1,440,000), We have decrease in Inventory that means we received cash not paid so it has to be subtracted and the decrease in AP means we paid our dues so it's added. (1,440,000+100,000-60,000=1,480,000)
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