Virginia Enterprises makes all purchases on account, subject to the following payment pattern: Paid in the month of purchase: 30% Paid in the ﬁrst month following purchase: 65% Paid in the second month following purchase: 5% If purchases for April, May, and June were $200,000, $160,000, and $250,000, respectively, what was the ﬁrm's budgeted payables balance on June 30?

Question

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First, we need to determine the payment for each month's purchases:
April: $200,000 x 30% = $60,000 (paid in April)
May: $160,000 x 65% = $104,000 (paid in May)
$160,000 x 5% = $8,000 (paid in June)
June: $250,000 x 65% = $162,500 (paid in June)
$250,000 x 5% = $12,500 (paid in July)

To find the budgeted payables balance on June 30, we need to add up the payments due in May and June:

$104,000 (May payment) + $8,000 (June payment for May purchases) + $162,500 (June payment for June purchases) + $12,500 (July payment for June purchases) = $287,000

Then, we need to subtract the payments made in April and May:

$287,000 - $60,000 (April payment) - $104,000 (May payment) = $123,000

Therefore, the budgeted payables balance on June 30 is $183,000 (option C).

Virginia Enterprises Makes All Purchases on Account, Subject to the Following