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Wages expense was $20,000. Beginning wages payable was $17,000 and ending was $14,000. Under the direct method, what is cash paid to employees?
A$20,000
B$17,000
C$23,000
D$51,000
Answer & Solution
Correct answer: C. $23,000
1. Cash paid to employees = beginning wages payable + wages expense − ending wages payable.
2. = $17,000 + $20,000 − $14,000.
3. = $37,000 − $14,000 = $23,000.
4. Trap: $17,000 (option B) drops the wages expense entirely.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.2.4 "Operating activities section (direct method)", p.283_
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