Question - Hardy Company's cost of goods sold is consistently 70% of sales. The company plans to carry ending merchandise inventory for each month equal to 30% of the next month's budgeted cost of goods sold. All merchandise is purchased on credit, and 50% of the purchases made during a month is paid for in that month. Another 35% is paid for during the first month after purchase, and the remaining 15% is paid for during the second month after purchase. Expected sales are: August (actual), $395,000; September (actual), $380,000; October (estimated), $340,000; November (estimated), $350,000.
Use this information to determine October's expected cash payments for purchases.