During Year 3, Fancy Foods Incorporated earned $54,000 of revenue on account. The beginning balance in accounts receivable was $5,000, and the ending balance was $10,000. Also, Fancy Foods Incorporated started the year with a beginning balance in accounts payable of $5,000. Fancy Foods' ending balance in account payable was $4,000. The company incurred $12,000 of operating expenses on account. Determine the amount of cash paid to settle accounts payable.
A)$13,000
B)$24,000
C)$96,000
D)$156,000

Question

Quizplus · Accepted Answer

To determine the cash paid to settle accounts payable, we need to calculate the change in accounts payable from the beginning of the year to the end of the year. Accounts payable decreased by $1,000 ($5,000 - $4,000). This means that the company paid $1,000 of accounts payable during the year. Therefore, the correct answer is A) $13,000, which is the sum of operating expenses on account ($12,000) plus the decrease in accounts payable ($1,000).

During Year 3, Fancy Foods Incorporated Earned $54,000 of Revenue