Question

Assume that a merchandising company prepared the following sales budget: September $ 600,000 November $ 800,000 October $ 750,000 December $ 900,000 The following information is also available: Desired ending inventory is $20,000 plus 70% of the next month’s cost of goods sold. Cost of goods sold is always 60% of sales. Merchandise purchases are paid 30% in the current month and 70% in the next month. Budgeted sales each month are 70% credit and 30% cash. 40% of credit customers pay in the current month, 50% pay in the first month after the sale, and 10% pay in the second month after the sale. What is the budgeted amount of accounts payable at the end of November? Multiple Choice $176,600 $345,700 $156,600 $365,400

Answer 1

Particulars	Amount
Sales of November	800000
Cost of Goods sold of November (60% of sales)	480000
Opening stock of November (20000 + 70% of 480000)	356000
Closing stock of November W.N 1	398000
Purchases of November (Cost of goods sold + Closing stock - Opening stock)	522000
Accounts payable (70% of Purchases)	365400

Answer = $365,400

.W.N. 1

Sales of December	900000
Cost of Goods sold December (60% of sales)	540000
Closing stock of november (20000 + 70% of 540000)	398000