Kelly Company is a retail sporting goods store that uses accrual accounting for its records. Facts regarding Kelly's operations are as follows:

l  Sales are budgeted at $220,000 for December year 1 and $200,000 for January year 2.

l  Collections are expected to be 60% in the month of sale and 38% in the month following the sale.

l  Gross margin is 25% of sales.

l  A total of 80% of the merchandise held for resale is purchased in the month prior to the month of sale and 20% is purchased in the month of sale. Payment for merchandise is made in the month following the purchase.

l  Other expected monthly expenses to be paid in cash are $22,600.

l  Annual depreciation is $216,000.

Below is Kelly Company's statement of financial position at November 30, year 1.

Assets 

Cash                                                              $ 22,000

Accounts receivable                                                   76,000

(net of $4,000 allowance for uncollectible accounts)

Inventory                                                           132,000

Property, plant, and equipment (net of $680,000 accumulated deprecation)      870,000

Total assets                                                       $1,100,000

Liabilities and Stockholders' Equity   

Accounts payable                                                   $ 162,000

Common stock                                                       800,000

Retained earnings                                                     138,000

Total liabilities and stockholders' equity                                 $1,100,000

The projected balance in accounts payable on December 31, year 1 is

A. $204,000.

B. $162,000.

C. Some amount other than those given.

D. $153,000.