The projections of direct materials purchases that follow are for the Sombo Corp

Question

The projections of direct materials purchases that follow are for the Sombo Corporation. Purchases on Account Cash Purchases December $40,000 $30,000 January 60,000 33,000 February 50,000 35,000 March 70,000 25,000 The company pays for 60 percent of purchases on account in the month of purchase and 40 percent in the month following the purchase. What is the expected cash payment for direct materials for the month of January? Answer a. $102,000 b. $85,000 c. $33,000 d. $108,000 The projections of direct materials purchases that follow are for the Sombo Corporation. Purchases on Account Cash Purchases December $40,000 $30,000 January 60,000 33,000 February 50,000 35,000 March 70,000 25,000 The company pays for 60 percent of purchases on account in the month of purchase and 40 percent in the month following the purchase. What is the expected cash payment for direct materials for the month of January? The projections of direct materials purchases that follow are for the Sombo Corporation. Purchases on Account Cash Purchases December $40,000 $30,000 January 60,000 33,000 February 50,000 35,000 March 70,000 25,000 The company pays for 60 percent of purchases on account in the month of purchase and 40 percent in the month following the purchase. What is the expected cash payment for direct materials for the month of January? Purchases on Account Cash Purchases $40,000 $30,000 60,000 33,000 50,000 35,000 70,000 25,000 $102,000 $85,000 $33,000 $108,000 Purchases on Account Cash Purchases December $40,000 $30,000 January 60,000 33,000 February 50,000 35,000 March 70,000 25,000

Explanation / Answer

Hi,

Please find the answer as follows:

Payments Made in March = 60%*60000 (January on Account Purchases) + 40%*40000 (December Balance on Account Purchases)+ 33000 (Cash Payment) = 85000

Answer is Option B (85000).

Thanks.

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