Acti Manufacturing Corporation is estimating the following raw material purchase

Question

Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year:

At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase.

In Acti's budgeted balance sheet at December 31, at what amount will accounts payable for raw materials be shown?

Multiple Choice

$588,000

$780,000

$564,000

$468,000

Explanation / Answer

AP as on December 31=(60%*December purchases)

=(0.6*780,000)

which is equal to

=$468000(D)

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