Expected direct materials purchases in Rees Company are $210,000 in the first quarter and $270,000 in the second quarter.Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter.The budgeted cash payments for purchases in the second quarter are:
A)$288,000.
B)$270,000.
C)$234,000.
D)$216,000.

Question

Quizplus · Accepted Answer

In the second quarter, Rees Company will pay 40% of the second quarter's purchases in cash, which is 0.40 * $270,000 = $108,000. Additionally, they will pay the remaining 60% of the first quarter's purchases, which is 0.60 * $210,000 = $126,000. Therefore, the total cash payments for the second quarter are $108,000 + $126,000 = $234,000.

Expected Direct Materials Purchases in Rees Company Are $210,000 in the First