Answered

Preparing an Accounts Payable Schedule Wight Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: April $374,400 May 411,200 June 416,000 Wight typically pays 20% on account in the month of billing and 80% the next month. Required: 1. How much cash is required for payments on account in May

Answer :

letmeanswer

Solution and Explanation:

1) The may month payments is = 80 percent of the april month purchases + 20 percent of the may month purchases

= $ 374,400 multiply with 80 percent + 411200 multiply with 35 percent

=Therefore, $ 443120

2) The june month payment is = 80 percent of the may month purchases + 20 percent of the june month purchases

= $ 411200 multiply with 80 percent + 416,000 multiply with 20 percent  

= Therefore, $ 432960

Answer:

$299,520

Explanation:

Purchases may be done in 2 forms; by the immediate payment of cash or on accounts otherwise known as credit purchase. For credit purchases, cash will be paid on a later date as agreed by both parties.

Given that Wight typically pays 20% on account in the month of billing and 80% the next month, this means that cash to be paid in May will consist of 20% purchases in the month and 80% of the purchase made in April. Therefore, cash required for payments on account in May

= 80% × $374,400

= $299,520

Other Questions