Farley Company reported the following information for 2016: $$\begin{array} { l c c c c c }
& \text { September } & \text { October } & \text { November } & \text { December } & \text { January } \
\text { Budgeted sales } & \$ 240,000 & \$ 310,000 & \$ 290,000 & \$ 360,000 & \$ 200,000 \
\text { Budgeted purchases } & \$ 90,000 & \$ 120,000 & \$ 128,000 & \$ 144,000 & \$ 88,000
\end{array}$$ Cost of goods sold is 35% of sales.
-Farley 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, 2016?
A)$48,000
B)$72,000
C)$102,000
D)$51,200

Question

Farley Company reported the following information for 2016: $$\begin{array} { l c c c c c } 
& \text { September } & \text { October } & \text { November } & \text { December } & \text { January } \
\text { Budgeted sales } & \$ 240,000 & \$ 310,000 & \$ 290,000 & \$ 360,000 & \$ 200,000 \
\text { Budgeted purchases } & \$ 90,000 & \$ 120,000 & \$ 128,000 & \$ 144,000 & \$ 88,000
\end{array}$$ Cost of goods sold is 35% of sales. 
-Farley 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, 2016?
A)$48,000
B)$72,000
C)$102,000
D)$51,200

Quizplus · Accepted Answer

Purchases in October = $120,00060% paid in October = $120,000 x 60% = $72,00040% paid in November = $120,000 x 40% = $48,000Budgeted balance for Accounts Payable at October 31, 2016 = $72,000

Farley Company Reported the Following Information for 2016 Cost of Goods Sold Is 35% of Sales