Asked by Lawrence Woods on May 06, 2024
Verified
Um Corporation has provided the following information concerning its raw materials purchases. The budgeted cost of raw materials purchases in November is $286,032. The company pays for 40% of its raw materials purchases in the month of purchase and 60% in the following month. The budgeted accounts payable balance at the end of November is closest to:
A) $114,413
B) $140,333
C) $171,619
D) $286,032
Accounts Payable Balance
The total amount owed by a business to its suppliers or creditors at any given time, representing liabilities for goods and services received but not yet paid for.
Budgeted Cost PURCHASES
The projected expenses associated with acquiring materials or goods needed for production or sale.
Raw Materials Purchases
The total cost incurred by a company for buying the raw materials required in the production process.
- Acknowledge the relevance of accounts receivable and payable within cash budgeting practices.
Verified Answer
Step 1: Calculate the raw materials purchased in November that will be paid in December.
40% of the budgeted cost of raw materials purchases in November = 0.4 x $286,032 = $114,413
Step 2: Calculate the raw materials purchased in December that will be paid in December.
60% of the budgeted cost of raw materials purchases in November = 0.6 x $286,032 = $171,619
Step 3: Add Step 1 and Step 2 to get the budgeted accounts payable balance at the end of November.
$114,413 + $171,619 = $286,032
Therefore, the closest answer is C) $171,619.
Learning Objectives
- Acknowledge the relevance of accounts receivable and payable within cash budgeting practices.
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