Bates Boogie Boards has budgeted direct materials purchases of $120,000 in March

Question

Bates Boogie Boards has budgeted direct materials purchases of $120,000 in March and $160,000 in April. Past experience indicates that the company pays for 40% of its purchases in the month of purchase and the remaining 60% in the next month. During April, the following items were budgeted:

Wages Expense $32,000

Purchase of office equipment 13,000

Selling and Administrative Expenses 25,000

Depreciation Expense 9,000

How much are budgeted cash disbursements for April?

a. $214,000

b. $223,000

c. $206,000

d. $127,000

Explanation / Answer

Payment for april purchases $          64,000 Payment for march purchases $          72,000 Wages $          32,000 Purchase of office equipment $          13,000 Selling and admin expenses $          25,000 Total cash disbursements $        206,000

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