Question

streak merchandising company expects to purchase $60,000 of materials in july and $70,000 of materials in august. three-quarters 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. in addition, a 2% discount is received for payments made in the month of purchase. how much will august's cash disbursements for materials purchases be? select one: a. $44,100 b. $60,000 c. $54,100 d. $66,450

Answer 1

To calculate August's cash disbursements for material purchases, we need to consider the purchases made in July and August and the payment terms.

Purchases in July: $60,000

Purchases in August: $70,000

Three-quarters of July's purchases are paid in July, which is (3/4) * $60,000 = $45,000.

One-fourth of July's purchases are paid in August with a 2% discount, which is (1/4) * $60,000 = $15,000. After the discount, the payment will be 98% of $15,000 = $14,700.

For August's purchases, three-quarters will be paid in August, which is (3/4) * $70,000 = $52,500.

So, August's cash disbursements for material purchases will be the sum of payments made in August for both July and August's purchases:

$45,000 (July) + $14,700 (discounted payment for July) + $52,500 (August) = $112,200.

The correct answer is not listed among the options provided. The correct amount for August's cash disbursements should be $112,200.