Question

Shorstein Manufacturing Company purchases raw materials on account each month. Purchases are paid for according to the following schedule: 30% is paid in the month of the purchase 60% is paid in the month following the purchase 10% is paid in the second month following the purchase Budgeted purchases are as follows: March $75,000 April $90,000 May $85,000 How much will be reported for Accounts Payable for material purchases as of the end of May? $59,500 O $68,500 $87,000 $95,500

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer Part 1) Account payable at the end of May = (10% of April Purchases) + ((60%+10%) *of may purchases) = (10%*90000) + (70%*85000) = 9000 + 59500 = $ 68500 Thus the correct answer is $ 68500 Part 2) Raw material cost to be purchased = cost per unit *(ending raw material inventory + required for production - beginning inventory) = 2 * ((25000*4*10%)+(30000*4)-(30000*4*10%)) = 2 * (10000+120000-12000) = = $ 236000 Thus the correct answer is $236000 Part 3) Amount of borrowing = desired ending balance + cash disbursements - cash receipts - beginning cash balance = 25000+201000-150000-17000 = $ 59000 Thus the correct answer is $ 59000 Part 4) Video games inventory as on October 31 = sales for november 20% = 64000*20% = 12800 units Thus the correct answer is 12800 Units