It is January 1 of Year 2. Purchases for Yosef Company for January, February, an

Question

It is January 1 of Year 2. Purchases for Yosef Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000. 40% of purchases are for cash. Of the credit purchases, 30% are paid during the month of the purchase, 50% in the month following the purchase, and 20% in the second month following the purchases. TOTAL purchases for November and December of Year 1 were $200,000 and $400,000, respectively.

What is the forecasted amount of total CASH PAYMENTS FOR PURCHASES in March? Note: This is the sum of immediate payments from cash purchases, same-month cash payments of credit purchases, and cash payments for credit purchases made in prior months.

  $460,000

  $374,000

  $472,000

  $348,000

  $434,000

  $460,000

  $374,000

  $472,000

  $348,000

  $434,000

Explanation / Answer

Total Cash disbursements for the month of march = 434000

Particulars January February March Purchases 200000 400000 500000 40% Paid In Cash 80000 160000 200000 Credit Purchases 120000 240000 300000 30% Credit Purchase Paid during the month 36000 72000 90000 50% Of credit Purchase paiud in the following month 0 60000 120000 20% Of credit purchase paid in second month of purchase 0 0 24000 Total Cash Disbursements 116000 292000 434000

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