Collections are expected to be 70 percent in the month of sale and 28 percent in
ID: 2558897 • Letter: C
Question
Collections are expected to be 70 percent in the month of sale and 28 percent in the month following the sale. Two percent of sales are expected to be uncollectible. Bad debts expense is recognized monthly.
A total of 70 percent of the merchandise for resale is purchased in the month prior to the month of sale, and 30 percent is purchased in the month of sale. Payment for merchandise is made in the month following the purchase.
The company's balance sheet as of November 30, 20x4, is as follows:
1. Compute the projected balance in accounts payable on December 31, 20x4.
Village Hardware is a retail hardware store. Information about the store's operations follows.Explanation / Answer
December purchase will be paid in january :
1) Projected balance in account payable is $401600
December Cost of goods sold (530000*80%) 424000 Add: Desired ending inventory (490000*80%*70%) 274400 Total needs 698400 Less: Beginning inventory (424000*70%) (296800) December purchase 401600