Question

Cash Payments Schedule Fein Company provided the following information relating to cash payments: Fein purchased direct materials on account in the following amounts: June $68,000 July 77,000 August 73,000 Fein pays 20% of accounts payable in the month of purchase and the remaining 80% in the following month. In July, direct labor cost was $32,300. August direct labor cost was $35,400. The company finds that typically 90% of direct labor cost is paid in cash during the month, with the remainder paid in the following month. August overhead amounted to $71,200, including $6,350 of depreciation. Fein had taken out a 4-month loan of $15,000 on May 1. Interest, due with payment of principal, accrued at the rate of 9% per year. The loan and all interest were repaid on August 31. (Note: Use whole months to compute interest payment.)

Answer 1

In August the cash payment plan is $197,940

The detailed presentation can be found in the attached file.

Answer 2

Answer: $191,590

Step-by-step explanation:

August Payments on accounts payable:

From JULY PURCHASES - $77,000 x 80%

$77,000 × 0.8 = $61,600

From August purchases - $73,000 x 20% $73,000 × 0.2 = $14,600

Direct labor payments:

From JULY: $32,300 x 10%

$32,300 × 0.1 = 3,230

From AUGUST: $35,400 x 90%

$35,400 × 0.9 = $31,860

Overhead : $71200 - $6350 = 64,850

Loan repayment - $15,450

Cash payments - $191,590

Loan repayment :

[Loan + ( loan × rate × period)

[15000 + (15000 × (9/100) × 4/12)]

15000 + 450 = $15,450

Cash payment for August :

15450+64850+31860+3230+14600+61600 = $191,590