Purchases on account are given below: 55% of the month's purchases will be paid in the month of the purchase; the remaining 45% will be paid in the following month.
How much will the cash payments for purchases be in December?

Question

Purchases on account are given below:  55% of the month's purchases will be paid in the month of the purchase; the remaining 45% will be paid in the following month.
How much will the cash payments for purchases be in December?

Quizplus · Accepted Answer

Budgeted cash payments for inventory in December = (November purchases × Percent paid in month following month of purchase) + (December purchases × Percent paid in month of sale)
Budgeted cash payments for inventory in December = ($40,000 × 45%) + ($50,000 × 55%) = $18,000 + $27,500 = $45,500

Purchases on Account Are Given Below: 55% of the Month's