In: Accounting
5-24 Preparing a cash payments budget (LO 4)
Dakota Williams is one of Texas’s premiere party planners. She purchases a variety of supplies, such as plastic tableware, stemware, and decorations, throughout the year. Dakota has prepared the following purchases budget for the coming year.
1st Quarter |
2nd Quarter |
3rd Quarter |
4th Quarter |
||||
Budgeted purchases |
$300,000 |
$420,000 |
$435,000 |
$515,000 |
Historically, Dakota has paid for 40% of her purchases in the quarter of purchase and 60% in the quarter following purchase. On December 31 of this year Dakota had a $250,000 accounts payable balance.
Required
Prepare Dakota’s cash payments budget for the coming year.
Dakota Williams | |||||
cash payments budget | |||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Year | |
Accounts Payable | $ 250,000 | $ 250,000 | |||
1st Quarter purchases | $300,000*40% = $120,000 | $300,000*60% = $180,000 | $ 300,000 | ||
2nd Quarter purchases | $420,000*40% = $168,000 | $420,000*60% = $252,000 | $ 420,000 | ||
3rd Quarter purchases | $435,000*40% = $174,000 | $435,000*60% = $261,000 | $ 435,000 | ||
4th Quarter purchases | $515,000*40% = $206,000 | $ 206,000 | |||
Total | $ 370,000 | $ 348,000 | $ 426,000 | $ 467,000 | $ 1,611,000 |
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