Question

Thomas Company has a sales budget for next month of $1,000,000. Cost of goods sold is expected to be 25 percent of sales. All goods are paid for in the month following purchase. The beginning inventory of merchandise is $50,000, and an ending inventory of $64,000 is desired. Beginning accounts payable is $160,000.

For Thomas Company, the ending accounts payable should be:
A. $341,000
B. $356,000
C. $314,000
D. $414,000

Answer 1

$264,000

Step-by-step explanation:

Calculation for the ending accounts payable

First step is to find the cost of goods sold

Using this formula

Cost of goods sold=Sales budget * Sales percentage

Let plug in the formula

Cost of goods sold=$1,000,000*25%

Cost of goods sold=250,000

Second step is to calculate for the ending accounts payable

Using this formula

Ending accounts payable=Ending inventory + Cost of goods sold - Beginning inventory

Let plug in the formula

Ending accounts payable= $64,000 + $250,000 - $50,000

Ending accounts payable= $264,000

Therefore the Ending accounts payable will be $264,000