Question

Preparing an Accounts Payable Schedule Wight Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: April $374,000 May 412,000 June 415,900 Wight typically pays 25% on account in the month of billing and 75% the next month.

Required:
1. How much cash is required for payments on account in May?
2. How much cash is expected for payments on account in June?

Answer 1

Wight Inc.

1. The cash required for payments on accounts in May

= $383,500

2. The cash required for payments on accounts is:

= $412,975

Step-by-step explanation:

a) Data and Calculations:

April May June

Expected purchases on account $374,000 $412,000 $415,900

Cash Payments:

Month of billing (25%) $93,500 $103,000 $103,975

Next month (75%) 280,500 309,000

Cash required for payments on accounts $383,500 $412,975