Question

Broihan Corporation has the following purchases budget for the last half of 2002:

July $100,000
October $ 90,000
August 80,000
November 100,000
September 110,000
December 94,000

Historically, the company pays one half at the time of purchase and the remainder in the month following purchase. What are the expected cash disbursements in August?

a. $ 80,000.
b. $ 90,000.
c. $ 95,000.
d. $100,000
e. $105,000

Answer 1

b. $ 90,000.

Step-by-step explanation:

Since the company pays half of the purchased amount at the time of purchase and the remainder in the following month. Cash disbursements in August are expected to be half of the amount purchased in July plus half of the amount purchased in August. Expected cash disbursements are:

`E=(100,000)/(2)+ (80,000)/(2)\\ E=\$90,000`

The answer is alternative b. $ 90,000.