Natasha Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000.
For Natasha Company, the ending accounts payable should be

Question

Quizplus · Accepted Answer

The cost of goods sold is 40% of $150,000, which is $60,000. Desired ending inventory is $6,000, and beginning inventory is $5,000, so purchases are $60,000 + $6,000 - $5,000 = $61,000. Since purchases are paid in the following month, ending accounts payable is $61,000.

Natasha Company Has a Sales Budget for Next Month of $150,000