Question

Rushmore Company started the year with 5,000 in accounts payable. During the year, the company provided services on account for45,000. Rushmore incurred 36,000 expenses on account during the year, and by year end the balance in accounts payable was24,000. Assuming that these are the only accounting events that affected Rushmore, how much of the accounts payable did the company pay off during the year?

Answer 1

Rushmore Company paid off $17,000 of its accounts payable during the year. This was determined by starting with their beginning balance, adding incurred expenses on account, and subtracting the ending balance.

Step-by-step explanation:

To determine how much of the accounts payable Rushmore Company paid off during the year, we need to consider the following: the beginning balance, the expenses incurred on account, and the ending balance. Rushmore started the year with $5,000 in accounts payable, provided services on account for $45,000, and incurred expenses on account of $36,000. By year's end, the balance in accounts payable was $24,000.

We calculate the amount paid off during the year by adding the expenses on account to the beginning balance, then subtracting the ending balance.Beginning Balance + Incurred Expenses on Account - Ending Balance = Amount Paid Off$5,000 + $36,000 - $24,000 = $17,000Therefore, Rushmore Company paid off $17,000 of its accounts payable during the year.