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12 July, 15:35

Garnett Co. expects to purchase $90,000 of materials in July and $105,000 of materialsin August. Three-quarters of all purchases are paid for in the month of purchase, and theother one-fourth are paid for in the month following the month of purchase. How muchwill August's cash disbursements for materials purchases be?

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  1. 12 July, 17:31
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    Answer: $101,250

    Explanation:

    Given that,

    Expects to purchase material in July = $90,000

    Expects to purchase material in August = $105,000

    August's cash disbursements for materials purchases:

    = 75% of August purchases + 1/4 of July purchases

    = 0.75 * $105,000 + 0.25 * $90,000

    = $78,750 + $22,500

    = $101,250
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