Question

b. Merchandise purchases were $53,000 and $86,000 for March and April, respectively. Typically, 20% of total purchases are paid for in the month of purchase with a 5% cash discount. The balance of purchases is paid for (without discount) in the following month.

Answer 1

$58,740

Step-by-step explanation:

The computation of the cash paid is shown below:

For March month

= March purchase × remaining percentage

= $53,000 × 80%

= $42,400

For April month

= April purchase × given percentage × after applying cash discount

= $86,000 × 20% × 95%

= $16,340

So, the total amount of cash paid would be

= $42,400 + $16,340

= $58,740

Simply we multiply the monthly percentage with their percentage criteria