Betty's Bagels has a cash cycle of 15 days, an operating cycle of 32 days, and...

Betty's Bagels has a cash cycle of 15 days, an operating cycle of 32 days, and an inventory period of 1.5 days. The company reported cost of goods sold in the amount of $102,000, and credit sales were $206,000. What is the company's average balance in accounts payable? Select one: a. $18,414.36 b. $4,843.84 c. $4,750.65 d. $21,918.00 e. $9,594.52

Expert Solution

Answer: The correct answer is C i.e. $4,750.65

Cash Cycle = Operating Cycle - Payable Period
15 days = 32 days - Payable Period
Payable Period = 32 days - 15 days
Payable Period = 17 days

Payable Period = 365 * Average Accounts Payable / Cost of Goods Sold
17 = 365 * Average Accounts Payable / $102,000
Average Accounts Payable = $4,750.65

jeff jeffy answered 2 years ago

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