Question

Violet had an opening trade payables balance of £3,450 on 1 December. During the month of December, she sold goods totalling £6,780 to customers on credit, purchased goods totalling £5,100 from suppliers on credit and made cash purchases of £400. She also received £3,900 from credit customers and made payments to credit suppliers of £4,200.

What was the balance on Violet's trade payables account at the end of December?
A £4,350
B £6,330
C £4,750
D £2,550

Answer 1

Violet's balance on the trade payables account at the end of December is £4,350, after taking into account the opening balance, credit purchases, and payments made to suppliers. The correct option is A.

Step-by-step explanation:

To find the balance on Violet's trade payables account at the end of December, we need to take her opening trade payables balance and adjust it for the purchases made on credit and the payments made to suppliers.

We start with an opening balance of £3,450. Violet purchased goods on credit totaling £5,100, which would increase her trade payables. However, she made payments to credit suppliers of £4,200, which would decrease her trade payables.

To calculate the ending trade payables balance, the formula is:

• Opening Balance of Trade Payables + Credit Purchases – Payments to Suppliers = Closing Balance of Trade Payables

We apply the values Violet provided:

£3,450 (Opening Balance) + £5,100 (Credit Purchases) - £4,200 (Payments) = £4,350 (Closing Balance)

Therefore, the balance on Violet's trade payables account at the end of December is £4,350. The correct option is A.