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ABC Inc. has a 59-day average payables period. The account payables are $2,737.50 at the beginning...

ABC Inc. has a 59-day average payables period. The account payables are $2,737.50 at the beginning and $3,589.50 at the end of the covering year. What is the annual cost of goods sold? Use a 365-day year when calculating the APP. (hint: use average account payables)

a.

$17,265
b.

$19,571
c.

$18,992
d.

$20,123

Solutions

Expert Solution

Average accounts payables = (2,737.50 + 3,589.50)/2 = $3,163.5

Average payables period = Average accounts payables/Cost of goods sold * 365

59 = 3,163.5/Cost of goods sold * 365

Cost of goods sold = 3,163.5 * 365/59

Average payables period = 19,570.8050847458

Average payables period = $19,571

jeff jeffy answered 2 years ago
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