Calder Water Company has budgeted direct materials inventory

Calder Water Company has budgeted direct materials inventory purchases as? follows:

?October: $ 300 comma 000$300,000

?November: $ 350 comma 000$350,000

?December: $ 390 comma 000$390,000

Calder pays for

1010?%

of their purchases during the month of? purchase,

7070?%

during the month following the?purchase, and the remaining

2020?%

two months after the month of purchase. What is the budgeted accounts payable balance on December? 31?

Solution

Calculate budgeted account payable balance on december 31:

Account payable balance on december 31 = (350000*20%+390000*90%) = $421000