QS 20-26A Merchandising: Cash payments for merchandise LO P4 Garda purchased $610,000 of merchandise in August and expects to purchase $730,000 in September. Merchandise purchases are paid as follows: 30% in the month of purchase and 70% in the following month. Compute cash payments for merchandise for September.

The cash payments for September are $646000

Explanation:

The cash payments for merchandise are divided into to parts. The previous month's 70% payments and this month's 30% payments. Thus, the cash payments for the month of september will be 70% for AAugust purchases and 30% for september's purchases.

Thus the cash payments for merchandise will be,

Cash Payments = 0.7 * 610000 + 0.3 * 730000  = $646000

=646000

Explanation:

30% pay in the month of purchase .

Note that th purchase made in September is $730,000 and 30% is due that month.

= 30% × 730,000

=  219,000

70% in the following month

For his category, payment be made in  September should relate to purchases made in August, and $610,000 was purchased in August

=70%× $610,000

=427,000

Cash payment f r te September

=  219,000 + 427,000

=$646,000

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