Han Company is preparing its financial records to get ready to apply for an important bank loan. In the past when Han has applied for bank loans, the bank loan officer has asked Han to provide a forecast of the amount of cash payments the company will have to make to its suppliers for inventory purchases. The bank loan officer needs this information in order to assess Han's ability to repay any bank loans. Han was embarrassed in the past because he did not have that cash payment forecast. This time he will be prepared.

It is January 1 of Year 2. Purchases for Han 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 purchases. 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 purchasesin March of Year 2? (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.)

Answer rating: 100% (QA)

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