Correy Company reported the following information for 2016:
$$\begin{array} { l c c c }
& \text { October }& \text { November } & \text { December } \
\text { Budgeted sales } & \$ 460,000 & \$ 440,000 & \$ 540,000 \
\text { Budgeted purchases } & \$ 240,000 & \$ 256,000 & \$ 288,000
\end{array}$$
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, 2016?

Question

Correy Company reported the following information for 2016:
$$\begin{array} { l c c c } 
& \text { October }& \text { November } &  \text { December } \
\text { Budgeted sales } & \$ 460,000 &  \$ 440,000 & \$ 540,000 \
\text { Budgeted purchases } & \$ 240,000 & \$ 256,000 & \$ 288,000
\end{array}$$
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, 2016?

Quizplus · Accepted Answer

Budgeted purchases for October = $240,00060% of October purchases paid in October = $240,000 x 0.60 = $144,00040% of October purchases paid in November = $240,000 x 0.40 = $96,000Budgeted balance for Accounts Payable at October 31, 2016 = $144,000 + $96,000 = $240,000

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