Planet Company purchased goods worth $50,000 in July and expects to purchase goods worth $70,000 in August.Planet typically pays for 35% of purchases in the month of purchase and 65% in the following month.What are Planet Company's total expected cash disbursements for purchases in the month of August?

Question

Quizplus · Accepted Answer

Expected cash disbursements for purchases in the month of August = (Purchase made in the month of July × 65%) + (Purchase made in the month of August × 35%)
Expected cash disbursements for purchases in the month of August = ($50,000 × 0.65) + ($70,000 × 0.35) = $32,500 + $24,500 = $57,000

Planet Company Purchased Goods Worth $50,000 in July and Expects