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.
Homework Answers
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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