Question

Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year:

September $ 830,000
October $ 940,000
November $ 860,000
December $ 780,000
At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase.

In Acti's budgeted balance sheet at December 31, at what amount will accounts payable for raw materials be shown?

Multiple Choice

$588,000

$780,000

$564,000

$468,000

Answer 1

$468,000

Step-by-step explanation:

The computation of the accounts payable for raw materials is shown below:

= Remaining percentage × Raw material purchase in December month

= 60% × $780,000

= $468,000

Since we have to find out the account payable so we multiply the remaining percentage with the raw material purchase in December month. All other information are not relevant. Hence, ignored it