Hammond's Cookie Toppings makes payments on its inventory purchases as follows: 25% in the month of purchase, 65% in the following month, and 10% in the second month following purchase. Budgeted inventory purchases for June, July, and August are $15,000, $19,000 and $24,000, respectively. At what amount are cash payments for inventory in August budgeted?

Question

Quizplus · Accepted Answer

For August purchases:
- 25% of $24,000 = $6,000 due in August
- 65% of $24,000 = $15,600 due in September
- 10% of $24,000 = $2,400 due in October

Therefore, cash payments for inventory in August budgeted are $6,000.

Hammond's Cookie Toppings Makes Payments on Its Inventory Purchases as Follows