Expected Direct Materials Purchases in Wade Company Are $525,000 in the First

question 51

Multiple Choice

Expected direct materials purchases in Wade Company are $525,000 in the first quarter and $675,000 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) $720,000.
• B) $675,000.
• C) $585,000.
• D) $540,000.

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Definitions:

Accounts Payable

The amounts a company owes to suppliers or creditors for goods and services received but not yet paid for.

February

The second month of the year in the Gregorian calendar, commonly associated with the shortest month of 28 days, except in a leap year when it has 29 days.

Cash Collections

The process or total amount of money received by a company from its customers for goods or services offered.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.