3. Walker Inc. budgeted direct materials purchases of $230,000 in March, $205,00
ID: 2454838 • Letter: 3
Question
3. Walker Inc. budgeted direct materials purchases of $230,000 in March, $205,000 in April, and $220,000 in May. Past experience indicates that the company pays for 45% of its purchases in the month of purchase and the remaining 55% in the next month. Wages are paid 90% in the month incurred and the balance in the month that follows. All other costs are paid 35% in the month of acquisition and the balance during the following month. Accounts payable is used only for material purchases. The following amounts are budgeted each month:
Wages expense
$62,000
Occupancy costs
12,000
Selling and administrative expenses
62,000
Depreciation expense
11,000
A. How much is budgeted cash disbursements for April?
Wages expense
$62,000
Occupancy costs
12,000
Selling and administrative expenses
62,000
Depreciation expense
11,000
Explanation / Answer
budgeted cash disbursements for April are $354,750 Statement showing cash disbursements Particulars March April May Direct Material Purchases 230,000.00 205,000.00 220,000.00 Payment in Same month @45% (1) 103,500.00 92,250.00 99,000.00 Payment in next month @55% (2) 126,500.00 112,750.00 Wages Expense 62,000.00 62,000.00 62,000.00 Payment in Same month @90% (3) 55,800.00 55,800.00 55,800.00 Payment in next month @10% (4) 6,200.00 6,200.00 Occupancy and selling and admin (12000+62000) 74,000.00 74,000.00 74,000.00 Payment in Same month @35% (5) 25,900.00 25,900.00 25,900.00 Payment in next month @65% (6) 48,100.00 48,100.00 Total Disbursements (1+2+3+4+5+6) 185,200.00 354,750.00 347,750.00
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