Question

Sheldon Company began Year 2 with $1,500 in accounts payable. During the year, the company incurred utility expense of $3,500 on account. The company paid $2,000 on accounts payable by year end. The company also paid a cash dividend of $500. At the end of Year 2, what is the balance in Sheldon’s accounts payable?

Answer 1

Answer:

Assuming that Dividend was payable at the beginning of Year 2.

$2,500

Assuming that Dividend was declared and paid during the Year 2.

$3,000

Explanation:

Account Payable Beginning Balance Year 2 = $1,500

Utility Expense on account for the Year 2 = $3,500

Payment made on Account Payable in Year 2 = $2,000

Payment of Dividend in year 2 = $500

Assuming that Dividend was payable at the beginning of Year 2.

Balance at the end of the Year 2 = Beginning Balance of Year 2 + Expenses on Account for Year 2 - Payment Made on Account Payable

Balance at the end of the Year 2 = $15,00 + 3,500 - ( $500 + $2,000 )

Balance at the end of the Year 2 = $2,500

Assuming that Dividend was declared and paid during the Year 2.

Balance at the end of the Year 2 = Beginning Balance of Year 2 + Expenses on Account for Year 2 - Payment Made on Account Payable

Balance at the end of the Year 2 = $15,00 + 3,500 - $2,000

Balance at the end of the Year 2 = $3,000