Question

Correy Company reported the following information for 2013:

October November December
Budgeted sales $460,000 $440,000 $540,000
Budgeted purchases $240,000 $256,000 $288,000
• Cost of goods sold is 35% of sales.
• Correy purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month.
• Accounts payable is used only for inventory acquisitions.
How much is the budgeted balance for Accounts Payable at October 31, 2013?

Answer 1

The budgeted balance for Accounts Payable at October 31, 2013 is $144,000.

Step-by-step explanation:

To find the budgeted balance for Accounts Payable at October 31, 2013, we need to calculate the amount of purchases made in October that are payable at the end of the month. The budgeted purchases for October are $240,000. Since 60% of purchases are paid in the month of acquisition, the amount payable in October is 60% of $240,000, which is $144,000.