Question

Gordands purchased $600,000 of merchandise in August and expects to purchase $720,000 in September. Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month. Compute cash disbursements for merchandise for September.

Answer 1

$630,000

Step-by-step explanation:

The computation of the cash disbursements for September month is shown below:

= September purchase amount × paid percentage + August purchase amount × following month paid percentage

= $720,000 × 25% + $600,000 × 75%

= $180,000 + $450,000

= $630,000

We actually multiplied the purchase cost with the pay percentage so that the exact amount can be billed.