Question

Zisk Co. purchases raw materials on account. Budgeted purchase amounts are April, $80,000; May, $110,000; and June, $120,000. Payments are made as follows: 70% in the month of purchase and 30% in the month after purchase. The March 31 balance of accounts payable is $22,000. Prepare a schedule of budgeted cash payments for April, May, and June.

Answer 1

Answer and Explanation:

The preparation of the schedule for budgeted cash payment for the April, May and June is presented below:

Particulars           April         May            June

Current month     $56,000   $77,000     $84,000

                   ($80,000 × 70%) ($110,000 × 70%)  ($120,000 × 70%)

Prior month          $24,000    $33,000     $36,000

                   ($80,000 × 30%) ($110,000 × 30%)  ($120,000 × 30%)

Total purchase       $80,000  $110,000     $120,000