Solving for cash payments (Appendix 9.1). Florida Corporation purchases raw mate

Question

Solving for cash payments (Appendix 9.1). Florida Corporation purchases raw materials on account from various suppliers. It normally pays for 60 percent of these in the month purchased, 30 percent in the first month after purchase, and the remaining 10 percent in the second month after purchase. Raw materials purchases during the last five months of the year are expected to be August $1,500,000 September 800,000 October 1,150,000 November. 1,950,000 December 750,000 Required: Compute the expected amount of cash payments to suppliers for the months of October, November, and December.

Explanation / Answer

October November December Total Purchases $1,150,000 $1,950,000 750000 Expected Cash Payment For Aug Purchases (10%*1500000) 150000 150000 For Sep Purchases (800000*30% and 10%) 240000 80000 320000 For Oct Purchases (60%,30%,10%) $690,000 $345,000 $115,000 1150000 Foe Nov Purchases (60%,30%) $1,170,000 $585,000 1755000 For Dec Purchases (60%) 450000 450000 ans Total expected cash payment 1080000 1595000 1150000 3825000

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