Metro, inc. sells backpacks.
the company's accountant is preparing the purchases budget for th...
Metro, inc. sells backpacks.
the company's accountant is preparing the purchases budget for the first quarter of operations.
metro maintains ending inventory at 20% of the following month's expected cost of goods sold.
expected cost of goods sold for april is $70,000.
all purchases are made on account with 25% of accounts paid in the month of purchase and the remaining 75% paid in the month following the month of purchase:
sales january february march
budgeted cost of goods sold $40,000 $50,000 $60,000
plus: desired ending inventory 10,000
inventory needed 50,000
less: beginning inventory (8,000)
required purchases $42,000
required:
1. based on this information, the total cash paid in march to settle accounts payable is:
a) $39,000.
b) $15,500.
c) $62,000.
d) $54,500.
2. the amount of accounts payable appearing on the march 31 pro forma balance sheet is:
a) $15,500.
b) $46,500.
c) $62,000.
d) none of the above.
Answers: 1
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