Use the information below for Finch Company to answer the question that follow. Finch Company began...

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Use the information below for Finch Company to answer the question that follow. Finch Company began...

Use the information below for Finch Company to answer the question that follow.

Finch Company began its operations on March 31 of the current year. Finch has the following projected costs:

April May June

Manufacturing costs (1) $159,900 $194,400 $201,000

Insurance expense (2) 870 870 870

Depreciation expense 1,820 1,820 1,820

Property tax expense (3) 560 560 560

(1) Of the manufacturing costs, three-fourths are paid for in the month they are incurred and one-fourth is paid for in the following month.
(2) Insurance expense is $870 a month; however, the insurance is paid four times yearly, in the first month of the quarter (i.e., January, April, July, and October).
(3) Property tax is paid once a year in November.

The cash payments expected for Finch Company in the month of April are
a.$141,218

b.$122,535

c.$119,925

d.$159,900

business accounting

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Answer 1

Answer #1

Correct answer-----------b.$122,535

Working

Manufacturing cost (159900 x 3/4)	$ 119,925.00
Insurance expense (for 3 months ) [870 x 3]	$ 2,610.00
Total cash payment	$ 122,535.00

Depreciation is not a cash expense hence not be included in calculation.

Property taxes are paid in November so they are excluded from calculations as well.

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Answer 2

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