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    Robert43's Avatar
    Robert43 Posts: 2, Reputation: 1
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    #1

    Mar 25, 2014, 03:07 PM
    Cash Budget
    Magnolia Candle Co. pays 10% of its purchases on account in the month of the purchase and 90% in the month following the purchases. If purchases are budgeted to be $11900 for March and $12700 for April, what are the budgeted cash payments for purchases on account for April? Below is the following in what I did. Collections from march sales (90% x 11900 = 10710. Collections for April sales (10% x 12700 = 1270 Total sales are (10710+1270) = 11980. How is this the wrong answer in solving this problem?
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    Mar 25, 2014, 03:35 PM
    Magnolia Candle Co. pays 10% of its purchases on account in the month of the purchase and 90% in the month following the purchases. If purchases are budgeted to be $11900 for March and $12700 for April, what are the budgeted cash payments for purchases on account for April? Below is the following in what I did. Collections from march sales (90% x 11900 = 10710. Collections for April sales (10% x 12700 = 1270 Total sales are (10710+1270) = 11980. How is this the wrong answer in solving this problem?
    comprehension is important but I would have given the same mathematical answer excepting I would not have referred to sales but purchases
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