Question

Answer the following questions using the information below:

Estate Corp. has the following information:

Month Budgeted Purchases
January $26,800
February 29,000
March 28,500
April 29,480
May 26,680

Purchases are paid for in the following manner:
10% of the purchase amount in the month of purchase
50% of the purchase amount in the month after purchase
40% of the purchase amount in the second month after purchase

*12) What is the expected balance in Accounts Payable as of March 31?*
A) $37,250
B) $18,312
C) $2,900
D) $30,520
Objective 6.A

Answer 1

The balance in Accounts Payable as of March 31 is calculated by adding the unpaid portions of the purchases from January, February, and March. It turns out to be $56,620, which does not match any of the provided answer options.

Step-by-step explanation:

The question asks for the expected balance in Accounts Payable as of March 31 for Estate Corp. To find this, we need to consider the purchases made in January, February, and March and apply the percentage paid in the month of purchase, the month after purchase, and the second month after purchase.

For January, only the 40% payment is still due by March 31. For February, both the 50% payment for the month after purchase and the 10% in the month of purchase are due. No payment has been made yet for March's purchases since we are calculating as of March 31st.

Calculating these amounts:

• January 40%: $26,800 * 40% = $10,720
• February 50%: $29,000 * 50% = $14,500
• February 10%: $29,000 * 10% = $2,900
• March purchases (100%, no payment yet): $28,500

Adding these together gives us the total Accounts Payable: $10,720 + $14,500 + $2,900 + $28,500 = $56,620.

Therefore, the expected balance in Accounts Payable as of March 31 is $56,620, which is not an option provided in the question.