Question

A company recorded net purchases of $20.3 billion for 20x2. in 20x1, ending trade payables was $1.2 billion and in 20x2, it was $1.6 billion. how much cash was paid to suppliers in 20x2?

a. $21.9 billion
b. $19.9 billion
c. $20.7 billion
d. $18.7 billion

Answer 1

The cash paid to suppliers by the company in 20x2 is $19.9 billion, calculated by adding net purchases to beginning trade payables and then subtracting the ending trade payables.

Step-by-step explanation:

To calculate the cash paid to suppliers in 20x2, you need to take into account the net purchases and the changes in trade payables over the year. The formula to calculate cash paid to suppliers is:

Cash Paid to Suppliers = Net Purchases + Beginning Trade Payables - Ending Trade Payables

In 20x1, the ending trade payables was $1.2 billion, which becomes the beginning trade payables for 20x2. The net purchases in 20x2 were $20.3 billion, and the ending trade payables in 20x2 was $1.6 billion. Using the formula:

$20.3 billion + $1.2 billion - $1.6 billion = $19.9 billion

Hence, the amount of cash paid to suppliers by the company in 20x2 is $19.9 billion (Option B).