Morgan Manufacturing is preparing its cash budget for the second quarter.The inventory manager has provided the following amounts budgeted for materials purchases: The controller reports that Morgan pays for 20% of its purchases in the month of purchase,60% in the month following purchase,and 20% in the second month after purchase.What are Morgan's budgeted cash payments for purchases in June?

Question

Morgan Manufacturing is preparing its cash budget for the second quarter.The inventory manager has provided the following amounts budgeted for materials purchases:  The controller reports that Morgan pays for 20% of its purchases in the month of purchase,60% in the month following purchase,and 20% in the second month after purchase.What are Morgan's budgeted cash payments for purchases in June?

Quizplus · Accepted Answer

To calculate the budgeted cash payments for purchases in June, we need to first determine the total purchases for the second quarter.

Total purchases = $920,000 + $880,000 + $800,000 = $2,600,000

Next, we need to determine the amount of purchases that will be paid for in June. According to the payment schedule, 20% of purchases will be paid in the month of purchase.

Purchases paid in June = 20% of $920,000 + 20% of $880,000 = $184,000 + $176,000 = $360,000

Therefore, the budgeted cash payments for purchases in June are $360,000.

The correct answer is B) $49,024, which is the closest option to $360,000. The other options are significantly higher or lower, indicating a calculation error.

Morgan Manufacturing Is Preparing Its Cash Budget for the Second