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22 September, 01:32

Pastoria Enterprises has scheduled raw material purchases of $100,000 in January, $130,000 in February, and $150,000 in March. The company pays for 75% of its purchases in the month of purchase and 25% the month after the purchase. Calculate the expected cash disbursements for the month of February.

a. $135,000

b. $122,500

c. $107,500

d. $130,000

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Answers (1)
  1. 22 September, 05:10
    0
    B

    Explanation:

    The question asks to calculate how much will be disbursed by the company in February.

    Firstly, we know that the company disburses 75% in the month of purchase and 25% during the month after purchase.

    Now, 75% of $130,000 would be disbursed as February's own payment:

    Mathematically 75/100 * 130,000 = 97,500

    Also, we should not forget that the company disburses 25% of previous month during the current. That is 25/100 * 100,000 = 25,000

    Total amount disbursed is thus 25,000 + 97,500 = $122,500
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Home » Business » Pastoria Enterprises has scheduled raw material purchases of $100,000 in January, $130,000 in February, and $150,000 in March. The company pays for 75% of its purchases in the month of purchase and 25% the month after the purchase.
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