Prepare a schedule of expected payments for direct materials

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Question - Moorcroft Company's budgeted sales and direct materials purchases are as follows:

 

Budgeted Sales

Budgeted D.M. Purchases

April

$301,000

$47,000

May

301,000

49,000

June

397,000

62,000

Moorcroft's sales are 40%% cash and 60%% credit. Credit sales are collected 20% in the month of sale, 50% in the month following sale and 26% in the second month following sale: 4% are uncollectible. Moorcroft's purchases are 50% cash and 50% on account Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase.

The assistant controller also suggested that the company switch their purchases to 40%% cash and 6086 on account to help stretch out their cash payments. There is no additional interest charge to do this and Moorcroft is still paying their bills on time. There is no change to the company's payment pattern.

Required - Prepare a schedule of expected payments for direct materials for June.

Reference no: EM133061107

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