Question

The following data have been taken from the budget reports of Kenyon Company, a merchandising company.

	Purchases				Sales
January	$	194,000			$	134,000
February	$	194,000			$	234,000
March	$	194,000			$	274,000
April	$	174,000			$	334,000
May	$	174,000			$	294,000
June	$	154,000			$	274,000

Forty percent of purchases are paid for in cash at the time of purchase, and 30% are paid for in each of the next two months. Purchases for the previous November and December were $184,000 per month. Employee wages are 10% of sales for the month in which the sales occur. Marketing and administrative expenses are 20% of the following month's sales. (July sales are budgeted to be $254,000.) Interest payments of $54,000 are paid quarterly in January and April. Kenyon's cash disbursements for the month of April would be: (CMA adapted)

Multiple Choice

• $183,000.

• $332,200.

• $261,575.

• $324,353.

Answer 1

Solution:

Computation of cash disbursemnt for April
Payment for Feb Purchases (194000*30%)	58200
Payment for March Purchases (194000*30%)	58200
Payment for April purchases ($174000*40%)	69600
Payment for Employee wages ($334000*10%)	33400
Marketing and admin. Expense(294000*20%)	58800
Interest payment	54000
Total cash disbursement	332200

Hence "$332,200" is correct.