Fundamental Accounting Principles
Fundamental Accounting Principles
24th Edition
ISBN: 9781259916960
Author: Wild, John J., Shaw, Ken W.
Publisher: Mcgraw-hill Education,
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Chapter 22, Problem 27QS
To determine

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 January, February and March

Expert Solution & Answer
Check Mark

Answer to Problem 27QS

Solution:

Cash payments for January = $ 28,320

Cash payments for February = $ 16,920

Cash payments for March = $ 19,240

    Torres Co.
    Cash Disbursements for Merchandise (Budgeted)
    For January, February and March

    JanuaryFebruaryMarch
    Cash payment for current month's purchases
    6,320
    7,440
    8,080
    Cash payment for previous month's purchases
    22,000
    9,480
    11,160
    Total cash payments for merchandise28,32016,92019,240

Explanation of Solution

The cash payments for January, February and March are calculated as under -

  1. Cash payments for January =

The cash payments for January are calculated as under −

Cashpaymentsfor Merchandise for January = Cash Payments for December Purchases + Cash Payments for January purchases

Cash payment for December = $ 22,000

Cash payments for January Purchases −

Given,

  • January purchases = $ 15,800
  • Percentage of Merchandise purchases to be paid in January = 40 % ( 40 % to be paid in the month of purchase)

Cash payments for January Purchases = January purchases X Percentage of total to be paidCash payments for January Purchases = $ 15,800 X 40%Cash payments for January Purchases = $ 6,320

Cash payments for January Purchases = $ 6,320

Now, the cash payments for January is calculated as −

Cashpaymentsfor Merchandise for January = Cash Payments for December Purchases + Cash Payments for January purchases

Given,

  • Cash payments for December Purchases = $ 22,000
  • Cash payments for January Purchases = $ 6,320
  • Cashpaymentsfor Merchandise for January =$ 22,000+ $ 6,320Cashpaymentsfor Merchandise for January =$ 28,320

  1. Cash payments for February =

The cash payments for February are calculated as under −

Cashpaymentsfor Merchandise for February = Cash Payments for January Purchases + Cash Payments for February purchases

The cash payments for January purchases and February purchases are calculated as under −

Cash payments for January Purchases −

Given,

  • August purchases = $ 15,800
  • Percentage of Merchandise purchases to be paid in February = 60 % (60 % to be paid in the following month)

Cash payments for January Purchases = January purchases X Percentage of total to be paidCash payments for January Purchases = $ 15,800 X 60%Cash payments for January Purchases = $ 9,480Cash payments for January Purchases = $ 9,480.

Cash payments for February Purchases −

Given,

  • February purchases = $ 18,600
  • Percentage of Merchandise purchases to be paid in February = 60 % ( 60 % to be paid in the month of purchase)

Cash payments for February Purchases = February purchases X Percentage of total to be paidCash payments for February  Purchases = $ 18,600 X 40%Cash payments for February  Purchases = $ 7,440

Cash payments for February Purchases = $ 7,440.

Now, the cash payments for February is calculated as −

Cashpaymentsfor Merchandise for February = Cash Payments for January Purchases + Cash Payments for February purchases

Given,

  • Cash payments for January Purchases = $ 9,480
  • Cash payments for February Purchases = $ 7,440

Cashpaymentsfor Merchandise for February =$ 9,480+ $ 7,440Cashpaymentsfor Merchandise for February =$ 16,920

  1. Cash payments for March =

The cash payments for March are calculated as under −

Cashpaymentsfor Merchandise for March = Cash Payments for February Purchases + Cash Payments for March purchases

The cash payments for February purchases and March purchases are calculated as under −

Cash payments for February Purchases −

Given,

  • August purchases = $ 18,600
  • Percentage of Merchandise purchases to be paid in March = 60 % ( 60 % to be paid in the following month)

Cash payments for February Purchases = February purchases X Percentage of total to be paidCash payments for February Purchases = $ 18,600 X 60%Cash payments for February Purchases = $ 11,160

Cash payments for February Purchases = $ 11,160.

Cash payments for March Purchases −

Given,

  • March purchases = $ 20,200
  • Percentage of Merchandise purchases to be paid in March = 40 % ( 40 % to be paid in the month of purchase)

Cash payments for March Purchases = March purchases X Percentage of total to be paidCash payments for March  Purchases = $ 20,200 X 40%Cash payments for March  Purchases = $ 8,080

Cash payments for March Purchases = $ 8,080.

Now, the cash payments for March is calculated as −

Cashpaymentsfor Merchandise for March = Cash Payments for February Purchases + Cash Payments for March purchases

Given,

  • Cash payments for August Purchases = $ 11,160
  • Cash payments for September Purchases = $ 8,080

Cashpaymentsfor Merchandise for March =$ 11,160+ $ 8,080Cashpaymentsfor Merchandise for March =$ 19,240

Conclusion

Thus, the schedule of cash payments for the Month of January, February and March has been prepared.

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Chapter 22 Solutions

Fundamental Accounting Principles

Ch. 22 - Prob. 11DQCh. 22 - Prob. 12DQCh. 22 - Prob. 13DQCh. 22 - Prob. 14DQCh. 22 - Prob. 15DQCh. 22 - Prob. 16DQCh. 22 - Budget motivation C1 For each of the following...Ch. 22 - Prob. 2QSCh. 22 - Prob. 3QSCh. 22 - Prob. 4QSCh. 22 - Prob. 5QSCh. 22 - Prob. 6QSCh. 22 - Prob. 7QSCh. 22 - Prob. 8QSCh. 22 - Prob. 9QSCh. 22 - Prob. 10QSCh. 22 - Prob. 11QSCh. 22 - Prob. 12QSCh. 22 - Prob. 13QSCh. 22 - Prob. 14QSCh. 22 - Prob. 15QSCh. 22 - Prob. 16QSCh. 22 - Prob. 17QSCh. 22 - Prob. 18QSCh. 22 - Prob. 19QSCh. 22 - QS 22-20 Cash receipts, with uncollectible...Ch. 22 - Cash receipts, with uncollectible accounts P2...Ch. 22 - Prob. 22QSCh. 22 - Prob. 23QSCh. 22 - Prob. 24QSCh. 22 - Prob. 25QSCh. 22 - Prob. 26QSCh. 22 - Prob. 27QSCh. 22 - Prob. 28QSCh. 22 - Prob. 29QSCh. 22 - Prob. 30QSCh. 22 - Prob. 31QSCh. 22 - Prob. 1ECh. 22 - Prob. 2ECh. 22 - Prob. 3ECh. 22 - Prob. 4ECh. 22 - Prob. 5ECh. 22 - Prob. 6ECh. 22 - Prob. 7ECh. 22 - Prob. 8ECh. 22 - Prob. 9ECh. 22 - Prob. 10ECh. 22 - Prob. 11ECh. 22 - Prob. 12ECh. 22 - Prob. 13ECh. 22 - Prob. 14ECh. 22 - Prob. 15ECh. 22 - Prob. 16ECh. 22 - Prob. 17ECh. 22 - Exercise 22-18 Budgeted cash receipts P2 Jasper...Ch. 22 - Prob. 19ECh. 22 - Prob. 20ECh. 22 - Prob. 21ECh. 22 - Prob. 22ECh. 22 - Exercise 22-23 Manufacturing: Cash...Ch. 22 - Prob. 24ECh. 22 - Prob. 25ECh. 22 - Prob. 26ECh. 22 - Prob. 27ECh. 22 - Prob. 28ECh. 22 - Prob. 29ECh. 22 - Prob. 30ECh. 22 - Prob. 31ECh. 22 - Exercise 22-32A Merchandising: Cash...Ch. 22 - Exercise 22-33A Merchandising: Budgeted balance...Ch. 22 - Prob. 34ECh. 22 - Prob. 35ECh. 22 - Prob. 1APSACh. 22 - Prob. 2APSACh. 22 - Prob. 3APSACh. 22 - Problem 22-4A Manufacturing: Preparation of a...Ch. 22 - Prob. 5APSACh. 22 - Problem 22-6AA Merchandising: Preparation of...Ch. 22 - Prob. 7APSACh. 22 - Prob. 8APSACh. 22 - Prob. 1BPSBCh. 22 - Prob. 2BPSBCh. 22 - Prob. 3BPSBCh. 22 - Problem 22-4B Manufacturing: Preparation of a...Ch. 22 - Prob. 5BPSBCh. 22 - Prob. 6BPSBCh. 22 - Prob. 7BPSBCh. 22 - Prob. 8BPSBCh. 22 - Prob. 22SPCh. 22 - Prob. 1AACh. 22 - Prob. 2AACh. 22 - Prob. 3AACh. 22 - Both the budget process and budgets themselves can...Ch. 22 - BTN 22-4 The sales budget is usually the first and...Ch. 22 - Certified Management Accountants must understand...Ch. 22 - Prob. 4BTNCh. 22 - Prob. 5BTNCh. 22 - To help understand the factors impacting a sales...
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