ICAEW BIP · Chapter 7 · Question 7 of 10
Budgeted purchases on credit are April £60,000, May £72,000 and June £66,000. The company pays 40% of purchases in the month of purchase, taking a 3% early settlement discount, and the remaining 60% in the following month. What are the budgeted payments to suppliers in June?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) £68,808
Explanation
June purchases paid in June: £66,000 x 40% x 97% = £25,608. May purchases paid in June: £72,000 x 60% = £43,200. Total June payments = £68,808.
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