Question

Zisk Co. purchases raw materials on account. Budgeted purchase amounts are: April, $96,000; May, $126,000; and June, $136,000. Payments are made as follows: 70% in the month of purchase and 30% in the month after purchase. The March 31 balance of accounts payable is $38,000.

Prepare a schedule of budgeted cash payments for April, May, and June

April	May	June
Current month purchases	70%
Ending accounts payable	30%
Total purchases		$0	$0	$0
Zisk Co.
Schedule of Cash Payments
For April, May, and June
		April	May	June
Cash payments for:
Current month purchases
Prior month purchases
Budgeted cash payments for materials

Answer 1

70% of each month's purchase will be paid in that month and the balance 30% will be paid in next month.Therefore firstly we need to differentiate the total amount of purchases of each month into 70% and 30%. 70% of the purchases will be paid in current month and balance 30% of the purchases will be ending accounts payable for that month and paid in next month. This is shown as follows:-

Particulars		April	May	June
Current month purchases	70%	$67,200	$88,200	$95,200
Ending accounts payable	30%	$28,800	$37,800	$40,800
Total purchases		$96,000	$126,000	$136,000

Schedule of budgeted cash payments for the month of April May and June are shown as follows:-

(Amount in $)

Zisk Co.
Schedule of Cash Payments
For April, May, and June
		April	May	June
Cash payments for:
Current month purchases		67,200	88,200	95,200
Prior month purchases		38,000	28,800	37,800
Budgeted cash payments for materials		105,200	117,000	133,000