a) Purchase of direct materials budgeted in January amount to: $________________

Question

a) Purchase of direct materials budgeted in January amount to: $______________________

b) Cash payments to suppliers budgeted in January amount to: $______________________

QUESTION 2 (TOTAL: 7 MARKS) On January 1 of the current period, Gotham Corporation has direct materi hand of $82,000. f this amount, Gotham owes suppliers $51,000 on account. The company has prepared the following budget estimates for January Direct materials inventory, 1/3 1 Direct materials budgeted for use in January. Accounts payable to suppliers, 1/31 90.000 $309,000 $62,000

Explanation / Answer

a) Purchase of direct materials budgeted in January :

Direct Material budgeted for use in January = $309,000
Add: Direct Material inventory on 1/31 = $90,000
Less: OIpening inventory on 1/1 = ($82,000)
Purchase of direct material budgeted in January = $317,000

b) Cash payments to suppliers budgeted in January:

Account payable to suppliers on 1/1 = $51,000
Add: Purchase budgeted during the month = $317,000
Less: Account payable on 1/31 = ($62,000)
Cash payments to suppliers budgeted in January = $306,000

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