A company pays 30% of purchases in cash and 60% of purchases on account in the month of purchase. January purchases are $34,000. How much cash is paid in January for purchases?

1. Cash purchases are 30% of $34,000, which is $10,200 paid at once. 2. Purchases on account are the other 70%, which is $23,800. 3. Of those, 60% are paid in the month of purchase, giving $23,800 times 60%, or $14,280. 4. The remaining 30% and 10% of the January payables fall into February and March. 5. Total January cash paid for purchases is $10,200 plus $14,280, which is $24,480. 6. $23,800 is the amount bought on account, not the amount paid. 7. $20,400 doubles the cash purchases and ignores the payables settled in month one. _Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 7.10 Cash Budget_