Share With

Chain Inc. provided the following information:

April May June

Projected merchandise purchases $92,000 $80,000 $66,000

Chain pays 40% of merchandise purchases in the month purchased and 60% in the following month.
General operating expenses are budgeted to be $31,000 per month of which depreciation is $3,000 of this amount. Chain pays operating expenses in the month incurred.
Chain makes loan payments of $4,000 per month of which $450 is interest and the remainder is principal.

Instructions

Calculate budgeted cash disbursements for May.

pur-new-sol

Answer :-

Total budgeted cash disbursements for May $119,200

Explanations :-

Budgeted cash disbursements for purchases:

Cash paid for May purchases ($80,000 x 40%) $ 32,000

Add :- Cash paid for April purchases ($92,000 x 60%) $ 55,200

Budgeted cash paid for purchases ( $ 32,000+$ 55,200) $87,200

Add :- Budgeted cash payments for operating expenses ($31,000 - $3,000) $28,000

Add :- Budgeted cash payment for loan ($4,000 - $450) $3,550

Add :- Budgeted cash payment for interest $450

Total budgeted cash disbursements for May $119,200

Related Questions