Question

Garda purchased \(600,000 of merchandise in August and expects to purchase \)720,000 in September. Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month. Compute cash payments for merchandise for September.

Short answer

The total cash payments for merchandise for the month of September will be $630,000.

Step-by-step solution

Given the information as

Merchandise purchased in August $600,000

Merchandise purchased in September $720,000

Payment made in 25% and 75% of the purchase and following month

Computation of cash payments

Garda
Cash payments for merchandise
For the month of September
Particulars	Amount
Cash payments for September purchases $(\mathbf{\$}\mathbf{720}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{25}\mathbf{\%})$	$180,000
Add: Cash payments for August purchases$(\mathbf{\$}\mathbf{600}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{75}\mathbf{\%})$	$450,000
Total cash payments	$630,000