Bailey Company Purchases All Direct Materials on Credit Prepare a Cash Payments Budget for Purchases of Materials for to Pay

Essay

Bailey Company purchases all direct materials on credit.The company expects to pay 60 percent of purchases in the quarter of purchase and 40 percent the following quarter.Accounts payable at the end of last year totaled $1,000,000,all of which will be paid in the first quarter of this coming year.Bailey's direct materials purchases budget shows the following projected cost of materials to be purchased:
$$\begin{array} { l l } \text { Quarter 1: } & \$ 2,150,000 \\\text { Quarter 2: } & \$ 2,250,000 \\\text { Quarter 3: } & \$ 2,470,000 \\\text { Quarter 4: } & \$ 2,230,000\end{array}$$
Prepare a cash payments budget for purchases of materials for each of the four quarters.