Mitchell Wright Group expects to generate sales of $5,950,000 for fiscal 2019; sales were $3,450,000 in fiscal 2018.Assume the following figures for the fiscal year ending 2018: cash $70,000; accounts receivable $250,000; inventory $400,000; net fixed assets $520,000; accounts payable $235,000; and accruals $155,000.Use the percentage-of-sales method to forecast accounts payable for the fiscal year ending 2019.
A)$212,036
B)$405,290
C)$619,619
D)$155,000

Question

Quizplus · Accepted Answer

The percentage-of-sales method involves forecasting accounts payable based on the increase in sales from one year to the next. The formula is: (Accounts Payable / Sales for 2018) * Sales for 2019. So, ($235,000 / $3,450,000) * $5,950,000 = $405,290.

Mitchell Wright Group Expects to Generate Sales of $5,950,000 for Fiscal