Question

ABC Company’s raw materials purchases for June, July, and August are budgeted at $46,000, $36,000, and $61,000, respectively. Based on past experience, ABC expects that 40% of a month’s raw material purchases will be paid in the month of purchase and 60% in the month following the purchase.


Required:
Prepare an analysis of cash disbursements from raw materials purchases for ABC Company for August.

June July August Budgeted raw material purchases August cash payments: Current months purchases Prior months purchases Tota

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Answer #1

Analysis of cash disbursement

June July August
Budgeted raw materials purchases 46000 36000 61000
August cash payment
Current month's purchases 24400
Prior month's purchases 21600
Total cash payments 46000
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