Ivory Inc.has forecast purchases on account to be $310,000 in March,$370,000 in April,$420,000 in May,and $490,000 in June.Seventy percent of purchases are paid for in the month of purchase,the remaining 30% are paid in the following month.What are budgeted cash payments for June?

Question

Quizplus · Accepted Answer

- 70% of March purchases ($310,000 x 0.70 = $217,000) will be paid in March
- 30% of March purchases ($310,000 x 0.30 = $93,000) will be paid in April
- 70% of April purchases ($370,000 x 0.70 = $259,000) will be paid in April
- 30% of April purchases ($370,000 x 0.30 = $111,000) will be paid in May
- 70% of May purchases ($420,000 x 0.70 = $294,000) will be paid in May
- 30% of May purchases ($420,000 x 0.30 = $126,000) will be paid in June
- 70% of June purchases ($490,000 x 0.70 = $343,000) will be paid in June
Total cash payments in June: $126,000 + $343,000 = $469,000.

Therefore, the best choice is B.

Ivory IncHas Forecast Purchases on Account to Be $310,000 in March,$370,000