Purchases in May were $58,000, while expected purchases for June and July are $72,000 and $85,000, respectively. All purchases are paid 40% in the month of purchase and 60% in the following month. At what amount are June payments for purchases budgeted?

A. $97,600

B. $63,600

C. $86,000

D. $66,400

The correct answer is B.

Explanation:

Giving the following information:

Purchases in May were $58,000, while expected purchases for June and July are $72,000 and $85,000, respectively. All purchases are paid 40% in the month of purchase and 60% in the following month.

Cash for June:

June = 72,000*0.4 = 28,800

From May = 58,000*0.6 = 34,800

Total = $63,600