Creditors accounts are settled 35% in the month of purchase and 65% in the month following the purchase.If credit purchases are $20 000 in January and $26 000 in February how much cash is paid to creditors in February?

Question

Quizplus · Accepted Answer

For January purchases, 35% is payable in January and 65% in February:
35% of $20 000 = $7 000 (payable in January)
65% of $20 000 = $13 000 (payable in February)

For February purchases, 35% is payable in February and 65% in March:
35% of $26 000 = $9 100 (payable in February)
65% of $26 000 = $16 900 (payable in March)

Thus, the total amount payable in February is:
$13 000 (from January purchases) + $9 100 (from February purchases) = $22 100
Therefore, the answer is D) $22 100.

Creditors Accounts Are Settled 35% in the Month of Purchase