Question

Finch Company began its operations on March 31 of the current year.  Finch has the following projected costs:

	April	May	June
Manufacturing costs (1)	$156,800	$195,200	$217,600
Insurance expense (2)	1,000	1,000	1,000
Depreciation expense	2,000	2,000	2,000
Property tax expense (3)	500	500	500

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(1) Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month.
(2) Insurance expense is $1,000 a month; however, the insurance is paid four times yearly in the first month of the
quarter, (i.e., January, April, July, and October).
(3) Property tax is paid once a year in November.

The cash payments for Finch Company expected in the month of June are

A) $215,500

B) $214,000

C) 188,800

D) 212,000

Answer 1

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						Finch
		June
Manufacturing Cost Payment:
For the month of May	1/4 th of May	$ 48,800
For the month of June	3/4 th of June	$163,200
Insurance Expense	Not Payment in June	$           -
Depreciation Expense	Non Cash Expense	$           -
Property Tax	Not Payment in June	$           -
Expected cash Payment in June		$212,000	D