B. Purchases in December will affect the end of December balance of accounts payable, as all payments are made in the month following purchase. Purchases made in November will not have an effect on December A/P, as they will have been fully paid during December. Thus, we need to determine the amount of purchases in December.

Purchased components are 40% of the cost of goods sold and cost of goods sold is 80% of sales. Purchases in December are 80% of components for January sales, and 20% for December sales. The cost of goods sold in January will be $400,000 ($500,000 × 80%). The cost of components in cost of goods sold in January is $160,000 ($400,000 × 40%). Purchases of components to satisfy January sales made in December are $128,000 ($160,000 × 80%). The cost of goods sold in December is $416,000 ($520,000 × 80%). The cost of components in cost of goods sold in December is $166,400 ($416,000 × 40%). Purchases of components to satisfy December sales made in December are $33,280 ($166,400 × 20%). Adding these two numbers together we get the amount of Accounts Payable for December of $161,280 ($128,000 + $33,280).

C. This is a cost of goods sold in December. See the correct answer for a complete explanation.

D. This answer is incorrect. See the correct answer for a complete explanation.