Answer:
The balance of account payable for month of June would be $94,128
Explanation:
Here for taking out the amount account payable for month of June , we will need to have Purchases for the month of June and as it is told that 74% of the inventory purchased would be paid in the following month, it means that the inventory that was purchased in May , 74% of it would be paid in June , so therefore the 74% of purchases would be the account payable for month of June.
First we would have to take out purchases and for that we will use equation of -
<u>Cost of goods sold + ending inventory - opening inventory (for June)</u>
COST OF GOODS SOLD =
$150,000 X 80%
= $120,000
ENDING INVENTORY =
$75,000 + 10% OF COST OF GOODS SOLD OF JULY
= $75,000 + 10% X [ 80% X $240,000 ]
= $75,000 + 10% X 192,000
= $75,000 + $19,200
= $94,200
OPENING INVENTORY =
$75,000 + $120,000 X 10%
= $75,000 + $12,000
= $87,000
Now putting all these values in equations top take out purchases-
=$120,000 + $94,200 - $87,000
= $127,200
PURCHASES = $127,200
ACCOUNT PAYABLE = PURCHASES X 74%
= $127,200 X 74%
= $94,128
