The following are budgeted data for the Bingham Corporation, a merchandising company: Assume that all purchases are paid for in the month following the month of purchase. The cash disbursements for purchases that would appear in the April cash budget would be:
A)$180,000
B)$157,500
C)$240,000
D)$217,500

Question

The following are budgeted data for the Bingham Corporation, a merchandising company:  Assume that all purchases are paid for in the month following the month of purchase. The cash disbursements for purchases that would appear in the April cash budget would be:
A)$180,000 
B)$157,500 
C)$240,000 
D)$217,500

Quizplus · Accepted Answer

The cash disbursements for purchases that would appear in the April cash budget can be calculated as follows:
March purchases = $200,000 + $40,000 = $240,000
April payments = March purchases * 90% = $240,000 * 0.9 = $216,000
So, the cash disbursements for purchases that would appear in the April cash budget would be $217,500 ($216,000 + $1,500 for the $15,000 beginning accounts payable balance). Therefore, the correct choice is D.

The Following Are Budgeted Data for the Bingham Corporation, a Merchandising