4. Information pertaining to Brenton Corporation's sales revenue is presented in the following table:
February March April
Cash Sales $160,000 $150,000 $120,000
Credit Sales 300,000 400,000 280,000
Total Sales $460,000 $550,000 $400,000
Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 70% of the next month's projected total sales. All purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase.
Brenton's budgeted total cash payments in March for inventory purchases are
In March we would pay 25% of the purchases of March and 75% of ...
The solution explains how to calculate the cash payments for inventory purchases