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5-24 Preparing a cash payments budget (LO 4) Dakota Williams is one of Texas’s premiere party...

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.

Solutions

Expert Solution

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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