Cathy is both a debtor and a creditor of Palm Ltd. At the end of the period Cathy owes Palm Ltd $500 while Palm Ltd owes Cathy $2000. After offsetting the amounts, Palm Ltd's books show a balance of how much as still owing to or from Cathy?
A) Cathy (creditor) is owed $1500
B) Cathy (debtor) owes $1500
C) Cathy (creditor) is owed $2500
D) Cathy (debtor) owes $2500

Question

Quizplus · Accepted Answer

After offsetting the amounts, Cathy (creditor) is owed $1500. This is calculated by subtracting the amount that Cathy owes Palm Ltd ($500) from the amount that Palm Ltd owes Cathy ($2000), resulting in a net amount owed to Cathy of $1500.

Cathy Is Both a Debtor and a Creditor of Palm