FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Finch Company began its operations on March 31 of the current year. Finch has the following projected costs:
(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 $1,080 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.
| April | May | June | |
| $155,800 | $190,300 | $203,900 | |
| Insurance expense (2) | 1,080 | 1,080 | 1,080 |
| 2,110 | 2,110 | 2,110 | |
| Property tax expense (3) | 540 | 540 | 540 |
(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 $1,080 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 May are
a.$38,950
b.$181,675
c.$220,625
d.$142,725
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