Hickory Furniture Company had the following costs paid during the month of May:
$\begin{array}{lr}
\text { Inventory purchases } & \$ 40,000 \
\text { Advertising costs } & 8,000 \
\text { Delivery costs } & 2.000
\end{array}$
Hickory sold $32,000 of the inventory and has agreed to pay warranty expenses for its customers. These are expected to be $1,600 and occur evenly over the next four months (i.e., starting in June).
-What is the amount of Hickory's cash-basis expenses for the month of May?

Question

Quizplus · Accepted Answer

Cash-basis expenses for May include inventory purchases ($40,000), advertising costs ($8,000), and delivery costs ($2,000), totaling $50,000. Warranty expenses are not included as they are not paid in May.

Hickory Furniture Company Had the Following Costs Paid During the Month