Answer:
Q. Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the purchase, and 5% in the second month following the purchase. What are the cash payments if it made the following purchases in 2018?
February 2018 $90,000, March 2018 92,000, April 2018 101,000, May 2018 98,000, June 2018 99,500.
Answer) $440,775
Explanation:
Cash payments to be made in 2018 for the purchases given in question are:
                               Feb 2018        Mar 2018   Apr 2018   May 2018  June 2018
Cash Payments
65% of $90,000   58,500            
30% of $90,000                           27,000
5%  of $90,000                                               4,500
65% of $92,000                           59,800
30% of $92,000                                             27,600
5%  of $92,000                                                                 4,600
65% of $101,000                                             65,650
30% of $101,000                                                              30,300
5%  of $101,000                                                                                      5,050
65% of $98,000                                                               63,700
30% of $98,000                                                                                      29,400
65% of $99,500                                                                                      64,675
Total                       $58,500     $86,800   $97,750     $98,600          $99,125
Total payments in 2018=$440,775
(58,500+86,800+97,750+98,600+99,125)