The amounts paid out here can be a multiple of 5 or a multiple of 7 or a combination of both. Therefore, we form an equation like 5x + 7y where
x represents the number of $5 chips and
y represents the number of $7 chips. Note that
both x and y may be ZERO in certain cases.
The best approach beyond this stage is to eliminate options based on whether 5x+7y can give us that particular value or not.
5x + 7y = 31 can be satisfied by taking x = 2 and y = 3. $31 can be dealt out using the chips.
5x + 7y = 29 can be satisfied by taking x = 3 and y = 2. $29 can be dealt out using the chips.
5x + 7y = 26 can be satisfied by taking x = 1 and y = 3. $26 can be dealt out using the chips.
5x + 7y = 21 can be satisfied by taking x = 0 and y = 3. $21 can be dealt out using the chips.
$23 is the only amount which cannot be expressed in terms of either a multiple of 5 or a multiple of 7 or both.
Answer options A, B, C and E can be eliminated.
The correct answer option is D.
Hope that helps!