The projections of direct materials purchases that follow are for the Sombo Corporation. $\begin{array}{lrr}
& \text { Purchases on } & \
& \text { Account } & \text { Cash Purchases } \
\text { December } & \$ 40,000 & \$ 30,000 \
\text { January } & 60,000 & 27,000 \
\text { February } & 50,000 & 35,000 \
\text { March } & 70,000 & 25,00
\end{array}$ The company pays for 60 percent of purchases on account in the month of purchase and 40 percent in the month following the purchase. What is the expected cash payment for direct materials for the month of February?
A) $52,000
B) $72,000
C) $89,000
D) $95,000

Question

The projections of direct materials purchases that follow are for the Sombo Corporation. $\begin{array}{lrr} 
& \text { Purchases on } & \
& \text { Account } & \text { Cash Purchases } \
\text { December } & \$ 40,000 & \$ 30,000 \
\text { January } & 60,000 & 27,000 \
\text { February } & 50,000 & 35,000 \
\text { March } & 70,000 & 25,00
\end{array}$ The company pays for 60 percent of purchases on account in the month of purchase and 40 percent in the month following the purchase. What is the expected cash payment for direct materials for the month of February?
A) $52,000
B) $72,000
C) $89,000
D) $95,000

Quizplus · Accepted Answer

In February, the cash payment includes 60% of February's purchases on account ($50,000 * 0.6 = $30,000), 40% of January's purchases on account ($60,000 * 0.4 = $24,000), and February's cash purchases ($35,000). Total = $30,000 + $24,000 + $35,000 = $89,000.

The Projections of Direct Materials Purchases That Follow Are for the Sombo