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QUESTION 41 Hessen is a wholesaler. The sales budget for November is $500,000 with a gross...

QUESTION 41 Hessen is a wholesaler. The sales budget for November is $500,000 with a gross margin percentage of 65 percent. Purchases are paid for in the month following purchase. Hessen's beginning inventory is $35,000 and an ending inventory of $32,000 is desired. The beginning balance in accounts payable is $185,000. Reference:

a) What is the November 30th balance in accounts payable?

b) What is the amount of cash disbursements in November?

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Answer #1

A) Sales revenue, November = $ 500,000

Gross Profit, November = $ 500,000 X 65% = $ 325,000

Cost of goods sold, November = Sales revenue - Gross Profit

Cost of goods sold, November = $ 500,000 - $ 325,000 = $ 175,000

Cost of goods sold = Beginning inventory + Purchase - Ending Inventory

$ 175,000 = $ 35,000 + Purchase - $ 32,000

Purchase, November = $ 175,000 + $ 32,000 - $ 35,000 = $ 172,000

Accounts Payable A/C

Date Accounts Title $ Date Accounts Title $
Nov Cash [Cash disbursement in November to pay off suppliers ] 185,000 Nov 1 Beginning Balance 185,000
Nov Purchase 172,000
Nov 30 Ending balance 172,000

The balance of accounts payable on November 30 = $ 172,000

B) Cash disbursement in November to pay off suppliers = $ 185,000

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