Question

Expected direct materials purchases in Metlock Company are $204000 in the first quarter and $264000 in the second quarter. 35 percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are: $279000. $207000. $261000. $225000.

Answer 1

The budgeted cash payments for the second quarter are $225000

Step-by-step explanation:

The cash payments in the second quarter will comprise of cash purchases for the second quarter which are 35% of purchases for the second quarter along with 65% of payments due for purchases of the first quarter.

The cash payment budgetedn for the second quarter is,

Cash payment = 0.35 * 264000 + 0.65 * 204000 = $225000