Question

Harrison Company, a small consulting firm, charges all of its operating expenses on Accounts Payable. On January 1, 2019, Harrison's Accounts Payable balance was $12,000 and, during the year, an additional $108,000 of operating expenses was charged on account. The ending Accounts Payable balance was $36,000. What is the amount of cash paid for expenses during 2019? a. $120,000 b. $132,000 c. $32,000 d. $84,000

Answer 1

The amount of cash paid for expenses during 2019 by Harrison Company is calculated to be $84,000, after factoring in the beginning and ending balances of Accounts Payable and the additional expenses charged.

Step-by-step explanation:

The student is asking about the amount of cash paid for expenses during 2019 for Harrison Company, given the starting and ending balances of Accounts Payable and the additional expenses charged on account during the year.

To calculate the cash paid for expenses, we should start with the increase in Accounts Payable during the year, add it to the beginning balance, then subtract the ending balance:

Begin Balance of Accounts Payable: $12,000
+ Expenses Charged During the Year: $108,000
- Ending Balance of Accounts Payable: $36,000
= Cash Paid for Expenses: $84,000

Therefore, the amount of cash paid for expenses during 2019 is $84,000 (answer option d).

Answer 2

The correct answer to the amount of cash paid for expenses during 2019 by Harrison Company is $84,000, calculated by starting with the beginning balance of accounts payable, adding the total expenses charged during the year, and subtracting the ending balance.

Step-by-step explanation:

To determine the amount of cash paid for expenses by Harrison Company during 2019, we can use the following accounts payable equation:

1. Start with the beginning Accounts Payable balance.
2. Add the total expenses charged on account during the year to get the total amount payable.
3. Subtract the ending Accounts Payable balance to find out the cash paid during the year.

So, the calculation would look like this:

Beginning balance of Accounts Payable: $12,000 + Total expenses charged on account during the year: $108,000

= Total amount payable: $120,000 - Ending balance of Accounts Payable: $36,000

= Cash paid for expenses during 2019: $84,000

Therefore, the correct answer is d. $84,000.