Apple Two Enterprises expects to generate sales of $5,950,000 for fiscal 2014; sales were $3,450,000 in fiscal 2013. Assume the following figures for the fiscal year ending 2013: cash $70,000; accounts receivable $250,000; inventory $400,000; net fixed assets $520,000; accounts payable $235,000; and accruals $155,000. Use the percent-of-sales method to forecast accounts payable for the fiscal year ending 2014.
A) $212,036
B) $405,290
C) $619,619
D) $155,000

Question

Quizplus · Accepted Answer

The percent-of-sales method involves forecasting accounts payable based on the increase in sales. The formula is: (Accounts Payable / Sales in 2013) * Sales in 2014. So, ($235,000 / $3,450,000) * $5,950,000 = $405,290.

Apple Two Enterprises Expects to Generate Sales of $5,950,000 for Fiscal