Finch Company began its operations on March 31 of the current year. Finch has the following projected
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) | $155,000 | $194,000 | $215,000 |
Insurance expense (2) | 840 | 840 | 840 |
Depreciation expense | 1,930 | 1,930 | 1,930 |
Property tax expense (3) | 430 | 430 | 430 |
(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 $840 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. $258,250
b. $161,250
c. $209,750
d. $48,500
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso