Question

In: Accounting

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

Use the information below for Finch Company to answer the question that follow.


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


AprilMayJune
Manufacturing costs (1)$157,800$192,400$205,800
Insurance expense (2)940940940
Depreciation expense2,0502,0502,050
Property tax expense (3)520520520


(1) Of the manufacturing costs, three-fourths are paid for in the month they are incurred and one-fourth is paid for in the following month.
(2) Insurance expense is $940 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 expected for Finch Company in the month of April are

a.$118,350

b.$139,485

c.$121,170

d.$157,800

Solutions

Expert Solution

>Correct Answer = Option 'c' $ 121,170

>working

Manufacturing cost paid in April $118,350 [$157800 x 3/4]
Insurance expense paid in April $2,820 [$940 x 3 months]
Derpeciation expense $0 [non cash item]
Property Taxes $0 [paid in Nov]
Total Cash payments in April $121,170 ANSWER

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