Merrell Enterprises had the following purchases budgeted for the last six months of 2013: Merrell pays one-half of a month's purchases in the month of purchase and the remainder in the following month. What are expected total cash disbursements for the last quarter of 2013?
A) $210,000
B) $255,000
C) $130,000
D) $260,000

Question

Merrell Enterprises had the following purchases budgeted for the last six months of 2013:  Merrell pays one-half of a month's purchases in the month of purchase and the remainder in the following month. What are expected total cash disbursements for the last quarter of 2013?
A) $210,000 
B) $255,000 
C) $130,000 
D) $260,000

Quizplus · Accepted Answer

To calculate the expected total cash disbursements for the last quarter of 2013, we need to add up the purchases budgeted for October, November, and December of 2013 and then calculate the payments that will be made in each of these months and the following month.

For October, we have 90,000 in budgeted purchases, so we will pay 45,000 in October and 45,000 in November. 
For November, we have 120,000 in budgeted purchases, so we will pay 60,000 in November and 60,000 in December. 
For December, we have 150,000 in budgeted purchases, so we will pay 75,000 in December and 75,000 in January 2014.

Adding up the expected payments for each month gives us a total of $255,000, which is option B.

Merrell Enterprises Had the Following Purchases Budgeted for the Last