Walnut Company's budgeted inventory purchases are as follows:
October: $300,000
November: $350,000
December: $390,000
Walnut pays for 20% of their purchases during the month of purchase, 70% during the month following the purchase, and the remaining 10% two months after the month of purchase. What are the budgeted cash payments for purchases for the month of December?

Question

Quizplus · Accepted Answer

In December, Walnut will pay 20% of December purchases ($390,000 * 20% = $78,000), 70% of November purchases ($350,000 * 70% = $245,000), and 10% of October purchases ($300,000 * 10% = $30,000). Total = $78,000 + $245,000 + $30,000 = $353,000.

Walnut Company's Budgeted Inventory Purchases Are as Follows