b. $274,400
Calculation:
Credit sales = 60%
Cash sales = 40%
Particulars $
Cash Purchase ($200,000 x 70% x 40%) = 56,000
Credit Purchase
January month ($200,000 x 70% x 60% x 5%) = 4,200
December month ($600,000 x 70% x 60% x 65%) = 163,800
November month ($400,000 x 70% x 60% x 30%) = 50,400
Total Cash Payments for purchase in January of year 2 = 274,400
<h3>
What are Credit Sales?</h3>
Credit sales are transactions in which the debt will be paid in full at a later time. In other words, credit sales are transactions when the consumer does not pay in whole, in cash, at the time of the transaction.
Cash sales, credit sales, and advance payment sales are the three basic types of sales transactions. The timing of when cash is received is the only distinction between these sales transactions.
1. Sales made in cash: When a transaction is made and the customer receives their goods or services, cash is collected.
2. Credit sales: After the sale is made, the customer has a certain amount of time to pay the vendor.
3. Sales involving advance payments: Buyers pay the vendor in full before closing the deal.
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