The company has estimated expenses as follows: General and administrative expens

Question

The company has estimated expenses as follows:

General and administrative expenses: $5,046
Material purchases are 23 percent of sales. Material purchases are paid in the month following the purchase.
Interest payment per month: $4,173
Rent expenses per quarter starting March: $4,381

Calculate the cash outflows for June.

Month Sales $ Month Sales $ Jan         13,921 July     30,510 Feb         28,928 Aug     45,387 Mar       45,387 Sep     13,921 Apr     30,510 Oct     45,387 May         13,921 Nov         28,928 June     28,928 Dec     30,510

Explanation / Answer

Computation of cash outflows for June:

$ Material purchases of May ( $ 13,921 x 23%) 3,201.83 General and administrative expenses 5,046 Interest payment 4,173 Rent payment for quarter 4,381 Total cash outflows for June 16,801.83

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