Pasadena Candle Inc. pays 40% of its purchases on account in the month of the purchase and 60% in the month following the purchase. Purchases are budgeted to be $40,000 for August and $36,000 for September. Prepare a simple cash budget for Pasadena Candle Inc. Pasadena Candle Inc. Schedule of Cash Payments for Purchases For the Mont Ending September Payments for August purchases Payments for September purchases?

Question

Kayleigh Ibarra

Business

3 June, 06:32

Pasadena Candle Inc. pays 40% of its purchases on account in the month of the purchase and 60% in the month following the purchase. Purchases are budgeted to be $40,000 for August and $36,000 for September. Prepare a simple cash budget for Pasadena Candle Inc. Pasadena Candle Inc. Schedule of Cash Payments for Purchases For the Mont Ending September Payments for August purchases Payments for September purchases?

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Liam Gould · Answer 1

Cash budget for Pasadena Candle Inc.

Month Purchased Paid

August $40,000 $16,000

September $36,000 $38,400

Calculations:

Month ending payment in September = 60 % x August purchases + 40 % x September purchases = 0.60 x $ 40,000 + 0.40 x $ 36,000

= $ 24,000 + $ 14,400 = $ 38,400