Answer (A) is correct . Payments are made in the month following purchase. The balance in accounts payable on November 30 is $175,000; this amount will be paid in December. The account is credited for purchases of a portion of components to be used for sales in December (20% of December components) and for sales in January (80% of January components). Cost of goods sold is 80% of sales, and components are 40% of cost of goods sold. Thus, December component needs are $166,400 ($520,000 sales ¡Á 80% ¡Á 40%), and January component needs are $160,000 ($500,000 sales ¡Á 80% ¡Á 40%). The December purchases of December component needs equal $33,280 ($166,400 ¡Á 20%). December purchases of January component needs are $128,000 ($160,000 ¡Á 80%). Hence, the total of December purchases (ending balance in accounts payable) equals $161,280 ($33,280 + $128,000
Answer (B) is incorrect because The sum of the component needs for December and January equals $326,400.
Answer (C) is incorrect because December component needs equals $166,400.
Answer (D) is incorrect because Cost of sales for December equals $416,000.
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Super Drive’s projected balance in accounts payable on December 31 is