Assume that a merchandising company prepared the following sales budget: September October $ 600,000 November $ 750,000 December $ 800,000 $ 900,000 The following Information is also available: Desired ending Inventory is $20,000 plus 70% of the next month's cost of goods sold. • Cost of goods sold is always 60% of sales. Merchandise purchases are paid 30% In the current month and 70% In the next month. Budgeted sales each month are 70% credit and 30% cash. ⚫ 40% of credit customers pay In the current month, 50% pay in the first month after the sale, and 10% pay In the second month after the sale. What is the budgeted amount of accounts payable at the end of November? Multiple Choice $176,600 $365,400 $345,700 $156,600 LE

Assume that a merchandising company prepared the following sales budget: September October $ 600,000 November $ 750,000 December $ 800,000 $ 900,000 The following Information is also available: Desired ending Inventory is $20,000 plus 70% of the next month's cost of goods sold. • Cost of goods sold is always 60% of sales. Merchandise purchases are paid 30% In the current month and 70% In the next month. Budgeted sales each month are 70% credit and 30% cash. ⚫ 40% of credit customers pay In the current month, 50% pay in the first month after the sale, and 10% pay In the second month after the sale. What is the budgeted amount of accounts payable at the end of November? Multiple Choice $176,600 $365,400 $345,700 $156,600 LE

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Assume that a merchandising company prepared the following sales budget:
September
October
$ 600,000
November
$ 750,000 December
$ 800,000
$ 900,000
The following Information is also available:
Desired ending Inventory is $20,000 plus 70% of the next month's cost of goods sold.
• Cost of goods sold is always 60% of sales.
Merchandise purchases are paid 30% In the current month and 70% In the next month.
Budgeted sales each month are 70% credit and 30% cash.
⚫ 40% of credit customers pay In the current month, 50% pay in the first month after the sale, and 10% pay
In the second month after the sale.
What is the budgeted amount of accounts payable at the end of November?
Multiple Choice
$176,600
$365,400
$345,700
$156,600
LE

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Step 1: Introduce to cost of goods sold

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Step 2: Working for cost of goods sold for November and December

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Step 3: Working for ending and beginning inventory for November

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Step 4: Working for purchase for November

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Step 5: Working for accounts payable at end of November

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