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18 April, 11:11

Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths 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. How much will August's cash disbursements for materials purchases be?

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  1. 18 April, 11:23
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    Total = $202,500

    Explanation:

    Giving the following information:

    Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths 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.

    To calculate the August cash disbursement, we need to use the following formula:

    Cash = total August cash required + cash from July

    Cash for August:

    August = 210,000*0.75 = 157,500

    From July = 180,000*0.25 = 45,000

    Total = $202,500
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