Crossley, Inc. has the following information:
Purchases are paid for in the following manner:
10 percent in the month of purchase
50 percent in the month after purchase
40 percent two months after purchase
-The total cash disbursements in May for the purchase of merchandise should be

Question

Crossley, Inc. has the following information:
  Purchases are paid for in the following manner:
10 percent in the month of purchase
50 percent in the month after purchase
40 percent two months after purchase
-The total cash disbursements in May for the purchase of merchandise should be

Quizplus · Accepted Answer

To determine the cash disbursements in May, we need to look at the purchases made in February, March, and April.

For purchases made in February, 40% of the payment will be due in May (2 months after purchase).
For purchases made in March, 50% of the payment will be due in May (1 month after purchase).
For purchases made in April, 10% of the payment will be due in May (same month as purchase).

Using this information, we can calculate the total cash disbursements in May:

Purchases made in February: 0.4 x $280,000 = $112,000
Purchases made in March: 0.5 x $220,000 = $110,000
Purchases made in April: 0.1 x $110,000 = $11,000

Total cash disbursements in May = $112,000 + $110,000 + $11,000 = $233,000

Therefore, the best choice is B) $148,580, which is the only option closest to the calculated value of $233,000.

Crossley, Inc. Has the Following Information