Union Air's January 2010, February 2010, and March 2010 purchases were $2,000,000, $1,500,000, and $4,000,000 respectively. Union Air pays 75% of its invoices in the month that those purchases take place, 20% in the first month subsequent to the purchase, and 5% in the second month subsequent to the purchase. How much cash will Union Air disburse in March 2010?

Question

Quizplus · Accepted Answer

Union Air will disburse cash in March 2010 as follows: 75% of March purchases ($4,000,000 * 0.75 = $3,000,000), 20% of February purchases ($1,500,000 * 0.20 = $300,000), and 5% of January purchases ($2,000,000 * 0.05 = $100,000). Total disbursement = $3,000,000 + $300,000 + $100,000 = $3,400,000.

Union Air's January 2010, February 2010, and March 2010 Purchases