Question

Lambert Company purchased $140,000 of goods in September and expects to purchase $130,000 of goods in October. Lambert typically pays for 20% of purchases in the month of purchase and 80% in the following month. Every month, Lambert must make the following payments: Rent $5,000 Wages 14,000 Utilities 3,000 Telephone 400 Loan on equipment 1,200 In mid-October, Lambert expects to buy a new computer for $4,500 using the company credit card. Typically, the credit card bill is paid in full in the following month. September credit card purchases totaled $6,000. What is Lambert's expected cash disbursement in October for purchases of goods?

Answer 1

Lambert's expected cash disbursement in October for purchases of goods = $138,000

Solution:

Given,

Lambert Company purchased $140,000 of goods

Expects to purchase $130,000 of goods

Lambert must make the following payments:

Rent $5,000

Wages 14,000

Utilities 3,000

Telephone 400

Loan on equipment 1,200

Lambert uses the company's payment card to acquire a desktop device for $4,500. Usually, the credit card balance must be charged in full in the next month. September payment card transactions contributed to $6,000.

Now , To find Lambert's expected cash disbursement in October for purchases of goods :

$5,000 + $14,000+ $3000+ $400+ $1200 = $23600

= $23600 + 80% of the Sept order of $140,000 ($112,000) + 20% of the Oct order of $130,000($26,000)

= $161,600 + the $6000 credit card = $167,600

Purchase of goods is $112,000 & $26,000 = $138,000