Question

ABC Company pays for raw material purchases as follows: 75 percent in the month of purchase; 25 percent in the subsequent month. Budgeted purchases are as follows: June = $56,000; July = $60,000. Budgeted cash payment to be made in the month of July is $_______

Answer 1

To calculate the budgeted cash payment in the month of July, we need to determine the total purchases made in each month and then apply the payment percentages.

Step-by-step explanation:

To calculate the budgeted cash payment in the month of July, we need to determine the total purchases made in each month and then apply the payment percentages.

In June, the budgeted purchases were $56,000. 75% of this amount will be paid in June which is $42,000.

In July, the budgeted purchases were $60,000. 75% of this amount will be paid in July which is $45,000.

Therefore, the budgeted cash payment to be made in the month of July is $45,000.