Problem
It is January 1 of Year 2. Purchases for Yosef Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000. 20% of purchases are for cash. Of the credit purchases, 30% are paid during the month of the purchase, 50% in the month following the purchase, and 20% in the second month following the purchase. TOTAL purchases for November and December of Year 1 were $200,000 and $400,000, respectively.
What is the forecasted amount of total CASH PAYMENTS FOR PURCHASES in January? Note: This is the sum of immediate payments from cash purchases, same-month cash payments of credit purchases, and cash payments for credit purchases made in prior months.