Purchases in May were $65,000, while expected purchases for June and July are $80,000 and $95,000, respectively. All purchases are paid 35% in the month of purchase and 65% in the following month. At what amount are June payments for purchases budgeted?

Question

Quizplus · Accepted Answer

To find June payments, we need to determine how much of May's purchases will be paid in June (65% of May purchases) and add that to the 35% payment for June's purchases.

May payments = 65,000 x 35% = 22,750 
June payments = (65,000 x 65%) + (80,000 x 35%) = 42,250 + 28,000 = 70,250

Therefore, the answer is choice B, $70,250.

Purchases in May Were $65,000, While Expected Purchases for June