Question

The accounts payable account has a beginning balance of $10,800 and the company purchased $50,000 of supplies on account during the month. The ending balance was $19,900. How much did the company pay to creditors during the month? Multiple Choice Ο $69,900 Ο $60,800 Ο $50,000 Ο $40,900

Answer 1

Solution:

The formula for calculating amount paid to creditors in a month is

= Beginning balance of accounts payable + Purchases made on credit/ account during the month - Ending balance of accounts payable

As per the information given in the question we have

Beginning balance of accounts payable = $ 10,800 ;

Purchases made on credit/ account during the month = $ 50,000   ;

Ending balance of accounts payable = $ 19,900

Applying the above information in the above formula we have the amount paid to creditors in a month as follows :

= $ 10,800 + $ 50,000 - $ 19,900

= $ 40,900

Thus the amount paid by the company to the creditors during the month = $ 40,900

The solution is option 4 = $ 40,900