Faye Co. manufactures a product using 3 kg of raw materials. Production and inventory budgets for June 2016 are as follows: Opening Inventories Closing Inventories Raw materials 11,000 kg 12,400 kg Finished goods 15,150 units 11,400 units Budgeted sales for June amounted to 18,000 units. During the production process, it is usually found that 5% of production units are scrapped as defective and this loss occurs after the raw materials have been placed in process. Required: 1. How many kilograms of raw materials will be purchased in June? 2. Assume that the cost of a kilogram of raw material is P16 and that 60% of purchases is paid in the month of purchase while the remaining in the month after the purchase, how much is the cash payment for the June?

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The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is