Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?

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Business

Mcbride

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Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?

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Jackson Owens · Answer 1

Total = $202,500

Explanation:

Giving the following information:

Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase.

To calculate the August cash disbursement, we need to use the following formula:

Cash = total August cash required + cash from July

Cash for August:

August = 210,000*0.75 = 157,500

From July = 180,000*0.25 = 45,000

Total = $202,500