3. ABC Co. had the following purchases on account: July August September $1,070,000 $980,000 $800,000 65% of the month's purchases are paid in the month of purchase. The remainder is paid in the month following purchase. How much will the cash payments for purchases be in August?

3. ABC Co. had the following purchases on account: July August September $1,070,000 $980,000 $800,000 65% of the month's purchases are paid in the month of purchase. The remainder is paid in the month following purchase. How much will the cash payments for purchases be in August?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 11EB: Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the purchase,...

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

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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?