Question

S&P Enterprises has scheduled direct material purchases of $120,000 in April, $140,000 in May and $160,000 in June. 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 t

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Purchases:

April= $120,000

May= $140,000

June= $160,000

The company pays for 75% of its purchases in the month of purchase and 25% the month after the purchase.

We can calculate the cash disbursement for each month:

April:

Purchase from April= 120,000*0.75= 90,000

May:

Purchase from May= 140,000*0.75= 105,000

Purchase from April= 120,000*0.25= 30,000

Total= 135,000

June:

Purchase from May= 140,000*0.25= 35,000

Purchase from June= 160,000*0.75= 120,000

Total= 155,000