In September of 2009,Mitford Products Inc.began doing business as a corporation.The company plans to start making its first purchases in October of 2009.They have the following purchases budgeted for the last quarter of 2009:
$\begin{array}{lr}
\text { October } & \$ 850000 \
\text { November } & 600000 \
\text { December } & 720000
\end{array}$
Mitford has worked out agreements with its various suppliers to pay for one-third of a month's purchases each month,beginning in the month of purchase,until the purchases are paid in full.No purchases were made prior to October.
What are expected total cash disbursements for the last quarter of 2009?
A) $1 490 000
B) $ 723 333
C) $1 006 667
D) $1 446 667

Question

In September of 2009,Mitford Products Inc.began doing business as a corporation.The company plans to start making its first purchases in October of 2009.They have the following purchases budgeted for the last quarter of 2009:
$\begin{array}{lr}
\text { October } & \$ 850000 \
\text { November } & 600000 \
\text { December } & 720000
\end{array}$ 
Mitford has worked out agreements with its various suppliers to pay for one-third of a month's purchases each month,beginning in the month of purchase,until the purchases are paid in full.No purchases were made prior to October.
What are expected total cash disbursements for the last quarter of 2009?
A) $1 490 000
B) $ 723 333
C) $1 006 667
D) $1 446 667

Quizplus · Accepted Answer

Explanation: The total cash disbursements for the last quarter of 2009 can be calculated as follows:- October purchases ($850,000) will be paid in three equal parts: one-third in October, one-third in November, and one-third in December. So, $850,000 / 3 = $283,333.33 per month.- November purchases ($600,000) will be paid in three equal parts: one-third in November, one-third in December, and the final third in January of the next year (which is not part of the last quarter of 2009). So, for the last quarter of 2009, only two-thirds will be paid: $600,000 * 2/3 = $400,000.- December purchases ($720,000) will be paid in three equal parts: one-third in December and the rest in the next year (which is not part of the last quarter of 2009). So, for the last quarter of 2009, only one-third will be paid: $720,000 / 3 = $240,000.Adding these amounts together gives the total cash disbursements for the last quarter of 2009: $283,333.33 (October) + $400,000 (November) + $240,000 (December) = $923,333.33. However, this calculation does not match any of the provided options, indicating a mistake in my initial calculation. Let's correct this:Correct calculation:- October: $850,000 / 3 = $283,333.33 paid in October, November, and December.- November: $600,000 / 3 = $200,000 paid in November and December.- December: $720,000 / 3 = $240,000 paid in December.Total for October payments: $283,333.33 (October portion) + $283,333.33 (November portion) + $283,333.33 (December portion) = $850,000.Total for November payments: $200,000 (November portion) + $200,000 (December portion) = $400,000.Total for December payments: $240,000 (December portion) = $240,000.Adding these corrected amounts: $850,000 (October) + $400,000 (November) + $240,000 (December) = $1,490,000.

In September of 2009,Mitford Products Inc October $850000 November 600000 December 720000\begin{array}{lr}\text { October } & \$ 850000 \\\text { November } & 600000 \\\text { December } & 720000\end{array} October November December ​$850000600000720000​

In September of 2009,Mitford Products Inc $\begin{array}{lr}\text { October } & \$ 850000 \\\text { November } & 600000 \\\text { December } & 720000\end{array}$