Your firm sells $2,000 worth of goods in December,$1,700 worth in January,$1,500 in February and $1,600 in March. Your cost is 60% of the retail price. You have a receivables period of 30 days and a payables period of 45 days. You buy your products one month prior to selling them. Which one of the following statements is correct given this information?

Question

Quizplus · Accepted Answer

To find the correct answer, we need to calculate the cost of goods sold (COGS) for each month and use that to calculate the payments to suppliers.

COGS for December = 0.6 * $2,000 = $1,200
COGS for January = 0.6 * $1,700 = $1,020
COGS for February = 0.6 * $1,500 = $900
COGS for March = 0.6 * $1,600 = $960

To calculate the payments to suppliers, we need to add up the COGS for the previous month and subtract the accounts payable balance from the previous month.

January payments to suppliers: ($1,200 + $450) - $0 = $1,650
February payments to suppliers: ($1,020 + $750) - $1,200 = $570
March payments to suppliers: ($900 + $750) - $1,020 = $630

Therefore, the correct answer is D, which represents the disbursements to suppliers in March.

Your Firm Sells $2,000 Worth of Goods in December,$1,700 Worth