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Axiom Inc. has a sales projection of $600,000 in April, $700,000 in May, $800,000 in June...

Axiom Inc. has a sales projection of $600,000 in April, $700,000 in May, $800,000 in June and $1,000,000 inJuly. Axiom's purchases are calculated as 50% of the NEXT MONTH'S sales. 10% of Axiom's purchases are made in cash, 60% of purchases are paid for 1 month after purchase, 30% of purchases are paid for 2 months after purchase. Axiom also pays $16,000 in rent every month and $10,000 in salaries every month.What is the projected cash disbursement for Axiom for June?

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Answer #1
April May June July
Projected sales 600000 700000 800000 1000000

Purchases [ 50% * Next month's sales ]

350000

[ 50% * 700000 ]

400000

[ 50% * 800000 ]

500000

[ 50% * 1000000 ]
June
Cash disbursement :
10% of June's purchases [ 10% * 500000 ] 50000
60% of May's Purchases [ 60% * 400000 ] 240000
30% of April's purchases [ 30% * 350000 ] 105000
Rent 16000
Salaries 10000
Total cash disbursement for June 421000
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