Concept Introduction:
Cash payments for merchandise:
The cash payments for merchandise are the cash payments made to the creditors of the business from whom the merchandise inventory has been purchased. The payment made to the creditors are based on the policies of the company. The company may decide to pay a portion of due in the month of purchase and a portion in the next month.
To compute:
Cash payments for September
Answer to Problem 26QS
Solution:
Cash payments for September = $ 630,000
| Cash payments for Merchandise (Budgeted) | |
| For the Month Ended September 30 | |
| Cash payments for August purchases | $ 450,000 |
| Cash payments for September purchases | $ 180,000 |
| Cash payments for Merchandise for September | $ 630,000 |
Explanation of Solution
The cash payments for September are calculated as under −
The cash payments for August purchases and September purchases are calculated as under −
Cash payments for August Purchases −
Given,
- August purchases = $ 600,000
- Percentage of Merchandise purchases to be paid in September = 75 % ( 75 % to be paid in the following month)
Cash payments for August Purchases = $ 450,000.
Cash payments for September Purchases −
Given,
- September purchases = $ 720,000
- Percentage of Merchandise purchases to be paid in September = 25 % ( 25 % to be paid in the month of purchase)
Cash payments for September Purchases = $ 180,000.
Now, the cash payments for September is calculated as −
Given,
- Cash payments for August Purchases = $ 450,000
- Cash payments for September Purchases = $ 180,000
Thus, the cash payments for the month of September = $ 630,000.
Want to see more full solutions like this?
Chapter 22 Solutions
Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
- At the beginning of the recent period there were 1,250 units of product in a department, one-half completed. These units were finished and an additional 4,850 units were started and completed during the period. 1,100 units were still in process at the end of the period, one-third completed. Using the weighted-average valuation method the equivalent units produced by the department were ____Units. (Round your answer to nearest unit)arrow_forwardI am looking for the correct answer to this general accounting problem using valid accounting standards.arrow_forwardI am looking for the correct answer to this general accounting question with appropriate explanations.arrow_forward
- I am searching for the accurate solution to this general accounting problem with the right approach.arrow_forwardCan you help me solve this general accounting question using the correct accounting procedures?arrow_forwardHonda Corporation had beginning raw materials inventory of $34,500. During the period, the company purchased $128,000 of raw materials on account. If the ending balance in raw materials was $22,700, the amount of raw materials transferred to work in process inventory is? Helparrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education