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Chain Inc
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.
Expert Solution
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
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