Question
In: Accounting
Heely Co. has the following projected sales in units for the first quarter of 20x2: January...
Heely Co. has the following projected sales in units for the first quarter of 20x2:
|
January |
10373 |
|
|
February |
17195 |
|
|
March |
12071 |
Heely Co.’s budget is based on the following assumptions: 36% of
all purchases of merchandise are paid in the month purchased and
the remainder in the following month. The number of units in each
month’s ending inventory is equal to 60% of the next month’s units
of sales.
The cost of each unit of inventory is $15.
What is the company’s accounts payable balance at the end of February?
Select one:
a. $76251
b. $165072
c. $174852
d. $135558
Solutions
Expert Solution
| Correct Answer : D i.e. $135558 | ||||
| January | February | March | ||
| Expected Unit Sales | 10,373 | 17,195 | 12,071 | |
| Add: Desired ending inventory | 10,317 | 7,243 | ||
| Total available | 20,690 | 24,438 | ||
| Less: being inventory | 6,224 | 10,317 | ||
| Total units to be purchased | 14,466 | 14,121 | ||
| Cost of each unit | 15 | 15 | ||
| Total purchase value | 216,993 | 211,809 | ||
| Accounts payable at the end of February | 135,558 | (211809*(1-36%)) | ||
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