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Zisk company purchases direct materials on credit. budgeted purchases are april, $85,000; may, $115,000; and june, $125,000. cash payments for purchases are: 75% in the month of purchase and 25% in the first month after purchase. purchases for march are $75,000.

a. prepare a schedule of cash payments for direct materials for april, may, and june.

User Spectras
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Final answer:

The Zisk company's schedule of cash payments for direct materials for April is $82,500, for May is $107,500, and for June is $122,500. These amounts are based on paying 75% of purchases in the month of purchase, and the remaining 25% in the following month.

Step-by-step explanation:

The Zisk company has set up a payment schedule for its direct material purchases that states 75% of purchases are paid in the month of purchase and the remaining 25% in the month following purchase. Using the budgeted purchases for each month, we can prepare a schedule of cash payments for direct materials for April, May, and June.

April Cash Payments

  • 75% of April purchases: 0.75 * $85,000 = $63,750
  • 25% of March purchases: 0.25 * $75,000 = $18,750

Total: $63,750 (April) + $18,750 (March) = $82,500

May Cash Payments

  • 75% of May purchases: 0.75 * $115,000 = $86,250
  • 25% of April purchases: 0.25 * $85,000 = $21,250

Total: $86,250 (May) + $21,250 (April) = $107,500

June Cash Payments

  • 75% of June purchases: 0.75 * $125,000 = $93,750
  • 25% of May purchases: 0.25 * $115,000 = $28,750

Total: $93,750 (June) + $28,750 (May) = $122,500

Please note, the totals calculated are the amounts that will be paid by Zisk company in each respective month for direct materials purchased.

User Mphuie
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