I could not figure this out completely, I got $142,000(112,000 april;30,000 march)It doesn't seem right to me but all my other caluclation have not added up to any of the other answers. Help


A company has budgeted direct materials purchases of 100,000 on march and 160,000 in April. Past experience indicates that the company pays for 70% of its purchases in the month of purchase and the remainging 30% in the next month. During April, the following items were budgeted:

Wages Expense
$50,000
Purchase of office equipment
$24,000
Selling and Administrative expenses
$16,000
Depreciation expense
$12,000

The budgeted cash disbursements for April are
a. 216,000
b. 142,000
c. 232,000
d. 244,000

You're only accounting for the cash disbursements for the direct materials purchased, and none of the other items listed. Since this is cash, you have to think strictly about which would be cash items paid out, versus what would show up on an income statement as expenses. Cash can be paid for items not recorded as expenses, and expenses can be recorded for which no cash was paid. Which items would cash be paid for?

If I add the 142000 + wages expense (50000)+Purchase of office equipment at(24000)+Selling and administrative expenses (16000) I get 232000. I excluded depreciation expense because it does not affect cash.

Quote:

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Originally Posted by jmancer

If I add the 142000 + wages expense (50000)+Purchase of office equipment at(24000)+Selling and administrative expenses (16000) I get 232000. I excluded depreciation expense because it does not affect cash.

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Correct. :-)