The following data have been taken from the budget reports of Brandon company, a

Question

The following data have been taken from the budget reports of Brandon company, a merchandising company.

Forty percent of purchases are paid for in cash at the time of purchase, and 30% are paid for in each of the next two months. Purchases for the previous November and December were $170,000 per month. Employee wages are 20% of sales for the month in which the sales occur. Selling and administrative expenses are 30% of the following month's sales. (July sales are budgeted to be $240,000.) Interest payments of $22,000 are paid quarterly in January and April. Brandon's cash disbursements for the month of April would be:

The following data have been taken from the budget reports of Brandon company, a merchandising company.

Explanation / Answer

Total disbursements in April = 40% of April purchases + 30% of February purchases + 30% of March purchases + employee wages (which are 20% of April sales) + selling/administrative expenses (which are 30% of May sales) + interest payments

= 40%*160,000 + 30%*180,000 + 30%*180,000 + 20%*320,000 + 30%*280,000 + 22,000 = $ 342,000

Hope this helped ! Let me know in case of any queries.

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