Question
Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: April May June Manufacturing costs (1) $156,000
Finch Company began its operations on March 31 of the current year. Finch has the following projected costs:
April | May | June | |
Manufacturing costs (1) | $156,000 | $195,000 | $205,000 |
Insurance expense (2) | 1,000 | 1,000 | 1,000 |
Depreciation expense | 2,140 | 2,140 | 2,140 |
Property tax expense (3) | 480 | 480 | 480 |
(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 $1,000 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 for Finch Company expected in the month of June are
a.$153,750
b.$251,250
c.$202,500
d.$48,750
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started