Question
It is November 1 of Year 1. Sales for Corbin Company for November and December of Year 1 and January of Year 2 are forecasted
It is November 1 of Year 1. Sales for Corbin Company for November and December of Year 1 and January of Year 2 are forecasted to be as follows:
November, 400,000; December 600,000; January, 200,000
On average, cost of goods sold is 70% of sales. During this period, Corbin Company expects inventory levels to remain constant. This means that inventory purchases are expected to equal the amount of cost of goods sold.
40% of purchases are for cash. Of the credit purchases, 5% are paid during the month of the purchase, 65% in the month following the purchase, and 30% in the second month following the purchase. Sales for September and October of Year 1 were 100,000 and 150,000, respectively.
What is the forecasted amount of total cash payments for November of Year 1?
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