An analyst has obtained the following information regarding ABC, Inc. Using this information, he needs to estimate the company's Accounts Payable.
Sales = $71,405
Cost of Goods Sold (COGS) = $32,168
Cash Cycle = 24 days
Operating Cycle = 75 days
Accounts Receivable Period = AR Period = Average Collection Period
(ACP) = 12 days
What is the company's Accounts Payable balance?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.
Accounts payables period
Cash Cycle = Operating cycle – Accounts payables period
24 Days = 75 Days - Accounts payables period
Accounts payables period = 75 Days – 24 Days
Accounts payables period = 51 Days
The company's Accounts Payable balance
The company's Accounts Payable balance = Cost of goods sold x [Accounts payables period / 365 Days]
= $32,168 x [51 Days / 365 Days]
= $4,494.71
“Hence, the company's Accounts Payable balance will be $4,494.71”
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