The following data have been taken from the budget reports of Brandon company, a

Question

The following data have been taken from the budget reports of Brandon company, a merchandising company.

Fifty percent of purchases are paid for in cash at the time of purchase, and 25% are paid for in each of the next two months. Purchases for the previous November and December were $210,000 per month. Employee wages are 20% of sales for the month in which the sales occur. Selling and administrative expenses are 30% of the following month's sales. (July sales are budgeted to be $280,000.) Interest payments of $22,000 are paid quarterly in January and April. Brandon's cash disbursements for the month of April would

be a) 200,000 b) 400,000 c) 260000 d)315000

The following data have been taken from the budget reports of Brandon company, a merchandising company.

Explanation / Answer

Brandon Company Cash disbursement Budget January February March April May June July Sales (given) $       1,60,000 $    2,60,000 $    3,00,000 $    3,60,000 $    3,20,000 $    3,00,000 $    2,80,000 Purchases $       2,20,000 $    2,20,000 $    2,20,000 $    2,00,000 $    2,00,000 $    1,80,000 Cash Disbursements: Cash Purchases (50% of B) $       1,10,000 $    1,10,000 $    1,10,000 $    1,00,000 $    1,00,000 $        90,000 Credit purchases 25 % of the previous month (W. N 1) $           52,500 $        55,000 $        55,000 $        55,000 $        50,000 $        50,000 $        45,000 25% of the month immediately before the previous $           52,500 $        52,500 $        55,000 $        55,000 $        55,000 $        50,000 $        50,000 Employee wages (20% of sales for the month) $           32,000 $        52,000 $        60,000 $        72,000 $        64,000 $        60,000 $        56,000 selling and administrative expenses (30% of the following month sales) $           78,000 $        90,000 $    1,08,000 $        96,000 $        90,000 $        84,000 $                 -   Interest payment (quarterly) $           22,000 $        22,000 Total Cash disbursements $       3,47,000 $    3,59,500 $    3,88,000 $    4,00,000 $    3,59,000 $    3,34,000 Brandon's Cash disbursements for the montth of April is $       4,00,000 W.N 1 Payment for credit purchases January February 25% of december purchases (25% of $ 210,000) $           52,500 25% of November purchases (25% of $ 210,000) $        52,500

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