Question

Depotissimo " , has predicted the following sales for the first four months of 2015

January	$ 7,000	March	$    15,000
February	$    12,000	April	$    18,000

Monthly purchases of raw materials accounts for 50 % of sales forecast for the next month.

Of total raw material purchases , payments are 50% in cash in the same month and 50% on credit. Of credit purchases 70% is paid in the following month and 30% is paid in two months.

Predicted costs for the company during this period are: Labor $ 1,000 per month , fixed overhead costs of $600 per month.

Two Interest payments on the debt of $650 each will be made  in January and February. Finally , at the end of the month of March sales staff receive a commission of 3 % of total sales for the first three months of the year and to be paid on March 30^th .

Calculate  the accounts payable as on March 31st ?

Answer 1

March purchases = 50% of april sales

= $18,000 * 50%

= $9,000

March credit purchases = $9,000 * 50%

= $4,500

March credit pruchases payable at the end of March (which are paid in april and may) = $4,500 * 100%

= $4,500

February purchases = 50% of march sales

= $15,000 * 50%

= $7,500

February credit purchases = $7,500 * 50%

= $3,750

February credit pruchases payable at the end of March (which are paid in april) = $3,750 * 30%

= $1,125

Accounts payable as on March 31st = February credit pruchases payable at the end of March + March credit pruchases payable at the end of March

= $1,125 + $4,500

= $5,625