Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 23

Resco, a local retail establishment, expects to make inventory purchases as follows for the first quarter of 2010: January, $5,500; February, $6,500; and March, $8,000. Prior experience shows that 25 percent of a given month’s purchases are paid in the month of purchase with the balance paid in the following month. No purchase discounts apply. What is the total expected cash disbursement for February? For March?

Step 1 of 3

Cash disbursement is the cash payment made by the individual or the company is a specified period of time which could be week, month, year etc. These payments are made against the purchases made by firm or the operating expense which occur.