Can anybody explain how to get 24000 in the third picture, which I circled in re

Question

Can anybody explain how to get 24000 in the third picture, which I circled in red?

Continuing from the previous example, Motor Company is preparing the direct material purchases budget for the quarter ending June 30 th Each unit requires five (5) kilograms of raw materials. Each kilogram costs $0.40. On March 31 the actual ending direct materials inventory was consistent with budget. Management wants to have direct materials inventory at the end of the month equal to 10% of the next month's production requirements All direct materials purchases are on account. Motor's usual payment pattern is as follows: 50% paid in the month of purchase, 50% paid in the month following purchase . The March 31, direct materials accounts payable balance is $12,000

Explanation / Answer

1. As stated in the question, 50% of purchase amount is to be paid in the month of purchase and balance 50% is to be paid in the next month.

2. The Accounts Payable at the beginning of April were $ 12,000.

3. This means that the Accounts Payable at the end of March were $ 12,000 which is 50% of Total Purchase Amount.

4. This also means that payment made suring March is $ 12,000 (50%)

5. Total Purchase Amount during March = Payment made (50%) + Balance in Accounts Payable (50%)

= $ 12,000 + $ 12,000 = $ 24,000

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