Forty Winks Corporation manufactures night stands. The production budget shows that Forty Winks Corporation plans to produce 1 c
2 answers:
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Answer:
$412,000
Explanation:
<em>1. Cash Purchases: </em>
The total purchases in the month of March is of $500,000.
It is given that 20% of Purchases are for cash.
Hence, 20% of $500,000 would be;
$500,000 x 0.20
$100,000
<em>2. Credit Purchases:</em>
<em>(i) Month of Purchase:</em>
The remaining amount for the month of purchase to be paid is 30% of the remaining amount after Cash Purchases during March. Hence, for March remaining payment is;
$500,000 - $100,000
$400,000
Hence 30% of $400,000 would be;
$400,000 x 0.30
$120,000
<em>(ii) Following Month:</em>
The following month payment to be included for month of March Cash Payment would be for the previous month which is February and will be calculated as follows;
20% of $400,000
$80,000
Following Month cash payment for the month of February, to be included in the month of March Cash Payment, will be calculated as follows;
$400,000 - $80,000
$320,000
Hence, 50% of $320,000 would be;
$320,000 x 0.50
$160,000
<em>(iii) Second Month:</em>
The Second month payment to be included for month of March Cash Payment would be for the month of January will be calculated as follows;
20% of $200,000
$40,000
Second Month cash payment for the month of January, to be included in the month of March Cash Payment, will be calculated as follows;
$200,000 - $40,000
$160,000
Hence 20% of $160,000 would be;
$32,000
<em>(3) CASH PAYMENT for PURCHASES in MARCH:</em>
Cash Purchases = $100,000
Credit Purchases = Month of Purchase + Following Month + Second Month
Credit Purchases = $120,000 + $160,000 + $32,000
Credit Purchases = $312,000
Hence;
Cash Payment for purchases in March = Cash Purchases + Credit Purchases
Cash Payment for purchases in March = $100,000 + $312,000
Cash Payment for Purchases in March = $412,000
