The following information is available for Royal Corp. for 2020: $\begin{array}{llcc}
\text {Accounts payable, beginning............................................................ } &\$14,000 \
\text {Cash payments on account during year............................................. } &7,000\
\text {Purchase discounts taken during year on 2020 purchases ................ } &1,200\
\text { Purchases....................................................................................... } &10,000\
\end{array}$
Assuming that all purchases are made on account, accounts payable at the end of the year are
A) $17,000
B) $22,800
C) $15,800
D) $24,000

Question

The following information is available for Royal Corp. for 2020: $\begin{array}{llcc}
  \text {Accounts payable, beginning............................................................  } &\$14,000  \
 \text {Cash payments on account during year.............................................  } &7,000\
 \text {Purchase discounts taken during year on 2020 purchases ................ } &1,200\
 \text { Purchases....................................................................................... } &10,000\
\end{array}$
 Assuming that all purchases are made on account, accounts payable at the end of the year are
A) $17,000
B) $22,800
C) $15,800
D) $24,000

Quizplus · Accepted Answer

The accounts payable balance at the end of the year can be calculated using the following formula:

Accounts Payable Ending Balance = Accounts Payable Beginning Balance + Cash Payments on Account - Purchase Discounts Taken + Purchases

Substituting the values given:

Accounts Payable Ending Balance = $14,000 + $7,000 - $1,200 + $10,000
Accounts Payable Ending Balance = $29,800

Therefore, the correct answer is choice C) $15,800 (as $29,800 is the ending balance, not the beginning balance).

The Following Information Is Available for Royal Corp Assuming That All Purchases Are Made on Account, Accounts Payable