Question

PB10.

LO 7.3All Temps has a policy of always paying within the discount period, and each of its suppliers provides a discount of 2% if paid within 10 days of purchase. Because of the purchase policy, 80% of its payments are made in the month of purchase and 20% are made the following month. The direct materials budget provides for purchases of $23,812 in February, $23,127 in March, $21,836 in April, and $28,173 in May. What is the balance in accounts payable for April 30, and May 31?

Answer 1

$4,367; $5,635

Step-by-step explanation:

Accounts payable on April 30:

= 20% of direct material purchases of April

= $21,836 x 20%

= $4,367.2

= $4,367 (Rounded to whole dollar)

Accounts payable on May 31:

= 20% of direct material purchases of May

= $28,173 x 20%

= $5,634.6

= $5,635 (Rounded to whole dollar)

Therefore, the balance in accounts payable for April 30, and May 31 are $4,367 and $5,635, respectively.