In December of 2008,Jones Inc.was formed as a corporation.The company plans to start its operations in early January of 2009.They have the following purchases budgeted for the first quarter of 2009:
$\begin{array}{lr}
\text { January } & \$ 600000 \
\text { February } & 500000 \
\text { March } & 300000
\end{array}$
Jones has worked out agreements with its various suppliers to pay for one-quarter 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 January.
What are total cash disbursements expected for the first quarter of 2009?
A) $425 000
B) $625 000
C) $775 000
D) $350 000

Question

In December of 2008,Jones Inc.was formed as a corporation.The company plans to start its operations in early January of 2009.They have the following purchases budgeted for the first quarter of 2009:
$\begin{array}{lr}
\text { January } & \$ 600000 \
\text { February } & 500000 \
\text { March } & 300000
\end{array}$ 
Jones has worked out agreements with its various suppliers to pay for one-quarter 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 January.
What are total cash disbursements expected for the first quarter of 2009?
A) $425 000
B) $625 000
C) $775 000
D) $350 000

Quizplus · Accepted Answer

To calculate the total cash disbursements, we need to calculate the payments for each month and add them up for the quarter.

For January:
1/4 of January purchases = $100,000
Total cash disbursement for January = $100,000

For February:
1/4 of January purchases = $100,000
1/4 of February purchases = $150,000
Total cash disbursement for February = $250,000

For March:
1/4 of January purchases = $100,000
1/4 of February purchases = $150,000
1/4 of March purchases = $150,000
Total cash disbursement for March = $400,000

Adding up the cash disbursements for all three months, we get:
$100,000 + $250,000 + $400,000 = $750,000

Therefore, the total cash disbursements expected for the first quarter of 2009 is $775,000 (option C).

In December of 2008,Jones Inc January $600000 February 500000 March 300000\begin{array}{lr}\text { January } & \$ 600000 \\\text { February } & 500000 \\\text { March } & 300000\end{array} January February March ​$600000500000300000​

In December of 2008,Jones Inc $\begin{array}{lr}\text { January } & \$ 600000 \\\text { February } & 500000 \\\text { March } & 300000\end{array}$