Garnett Co. expects to purchase $180000 of materials in July and $210000 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?
A) $135000
B) $157500
C) $202500
D) $210000

Question

Quizplus · Accepted Answer

July's cash disbursement for materials purchase = 0.75 x $180000 = $135000
August's cash disbursement for materials purchased in August = 0.75 x $210000 = $157500
August's cash disbursement for materials purchased in July = 0.25 x $180000 = $45000
Total cash disbursement in August = $157500 + $45000 = $202500