Question

The following data have been taken from the budget reports of Kenyon Company, a merchandising company....

The following data have been taken from the budget reports of Kenyon Company, a merchandising company.

Purchases Sales
January $ 190,000 $ 130,000
February $ 190,000 $ 230,000
March $ 190,000 $ 270,000
April $ 170,000 $ 330,000
May $ 170,000 $ 290,000
June $ 150,000 $ 270,000

Forty percent of purchases are paid for in cash at the time of purchase, and 30% are paid for in each of the next two months. Purchases for the previous November and December were $180,000 per month. Employee wages are 10% of sales for the month in which the sales occur. Marketing and administrative expenses are 20% of the following month's sales. (July sales are budgeted to be $250,000.) Interest payments of $50,000 are paid quarterly in January and April. Kenyon's cash disbursements for the month of April would be: (CMA adapted)

Multiple Choice

  • $315,370.

  • $254,331.

  • $323,000.

  • $178,000.

Business   Accounting   
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Answer #1
Calculation of cash disbursements for April
Cash Payment for April purchases (170,000 x 40%) 68,000
Cash Payment for March purchases (190,000 x 30%) 57,000
Cash payment for February purchases (190,000 x 30%) 57,000
Cash payment for employees wages ( 330,000 x 10%) 33,000
Cash payment for marketing and administrative expense (290,000 x 20%) 58,000
Cash payment for interest 50,000
Total cash disbursement $323,000

Kenyon's cash disbursements for the month of April would be $323,000.

Third option is correct option

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