Cave Hardware's forecasted sales for April; May; June; and July are $ 200,000; $ 210,000; $ 150,000; and $ 240,000; respectively. Sales are 70% cash and 30% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 80% of sales and ending inventory is maintained at $ 75,000 plus 10% of the following month's cost of goods sold. All inventory purchases are paid 26% in the month of purchase and 74% in the following month. What is the balance of accounts payable on the June 30 budgeted balance sheet at Cave Hardware?

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 -

Cost of goods sold + ending inventory - opening inventory (for June)

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