Gilbert Company purchased $40,000 of goods in July and expects to purchase $60,000 of goods in August.Gilbert typically pays for 25 percent of purchases in the month of purchase and 75 percent in the following month.What are Gilbert Company's total expected cash disbursements for purchases in the month of August?

Question

Quizplus · Accepted Answer

Gilbert Company typically pays for 25% of purchases in the month of purchase and 75% in the following month. This means that for the $40,000 purchases made in July, they will pay 25% or $10,000 in July and the remaining 75% or $30,000 in August. For the $60,000 purchases expected in August, they will pay 25% or $15,000 in August and the remaining 75% or $45,000 in September. Thus, the total expected cash disbursements for purchases in the month of August will be $30,000 (remaining amount for July purchases) + $15,000 (25% of August purchases) = $45,000. Therefore, the correct answer is (C) $45,000.

Gilbert Company Purchased $40,000 of Goods in July and Expects