Question

Jackson Company's payment policy is to pay 40 percent of its accounts payable in the quarter urchases are made and 60 percent in the following quarter. Assume Jackson's credit purchases totaled $400,000 in quarter 1, $420,000 in quarter 2, $530,000 in quarter 3 and $580,000 in quarter 4. What will Jackson's cash payments be for quarter 3? A. $482,500 B. $560,000 C. $530,000 D. $464,000 E. None of the above.

Answer 1

Answer: D. $464,000

Step-by-step explanation:

To calculate Jackson's cash payments be for quarter 3 goes thus:

60% of Quarter 2 will be calculated as:

= 60% × $420,000

= 0.6 × $420,000

= $252,000

40% of Quarter 3 will be calculated as:

= 40% of $530,000

= 0.4 × $530,000

= $212,000

We then add the values gotten together. This will be:

= $252,000 + $212,000

= $464,000

Therefore, the correct option is D.