Question

Wight Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: April $374,400 May 411,200 June 416,000 Wight typically pays 20% on account in the month of billing and 80% the next month. Required: 1. How much cash is required for payments on account in May

Answer 1

Total cash= $381,760

Step-by-step explanation:

Giving the following information:

Purchases:

April= $374,400

May= $411,200

Wight typically pays 20% on account in the month of billing and 80% the next month.

We need to determine the cash disbursement for May:

cash disbursement:

Purchase on cash May= (411,200*0.2)= 82,240

Purchase on account April= (374,400*0.8)= 299,250

Total cash= $381,760