Question

Purchases in May were $58,000, while expected purchases for June and July are $72,000 and $85,000, respectively. All purchases are paid 40% in the month of purchase and 60% in the following month. At what amount are June payments for purchases budgeted?

A. $97,600
B. $63,600
C. $86,000
D. $66,400

Answer 1

The correct answer is B.

Step-by-step explanation:

Giving the following information:

Purchases in May were $58,000, while expected purchases for June and July are $72,000 and $85,000, respectively. All purchases are paid 40% in the month of purchase and 60% in the following month.

Cash for June:

June= 72,000*0.4= 28,800

From May= 58,000*0.6= 34,800

Total= $63,600