Daisy Company is a customer service organization that is in the process of working on various components of their Cash Budget. Elizabeth, the accountant, is working on completing a Cash Disbursements Schedule and has decided to calculate Daisy's cash payment on Accounts Payable first. They pay their bills in the following manner - 60% of purchases are paid in month of the purchase, 30% of purchases are paid in the month following the purchase, and the remaining 10% of purchases are paid in the second month following the purchase. They made the following purchases: March, $25,600; April, $16,200; May, $22,300; June, $27,900; and July, $19,850. What will the total amount paid out by Accounts Payable for June be?
A) $23,430
B) $25,050
C) $27,900
D) $66,400

Question

Quizplus · Accepted Answer

The correct answer is $25,050. To get the correct total for June, add $16,740 ($27,900 × 60% of purchases paid in the month of the purchase) + $6,690 ($22,300 × 30% of purchases paid for purchases from the previous month) + $1,620 ($16,200 × 10% of purchases paid for purchases two months prior).

Daisy Company Is a Customer Service Organization That Is in the Process