The following are budgeted data for the Bingham Corporation, a merchandising company:

-Assume that all purchases are paid for in the month following the month of purchase. The cash disbursements for purchases that would appear in the April cash budget would be:

Question

The following are budgeted data for the Bingham Corporation, a merchandising company:

-Assume that all purchases are paid for in the month following the month of purchase. The cash disbursements for purchases that would appear in the April cash budget would be:

Quizplus · Accepted Answer

We need to calculate the cash disbursements for purchases for the month of April. The given purchases for the month of March are $225,000. However, as per the assumption, these purchases will be paid for in the month following the month of purchase, which means in April. Therefore, the cash disbursements for purchases in April will be $225,000. However, there is a discount of 2% if the payment is made within 10 days. If the company avails this discount, they will pay only 98% of the purchase price, which is $220,500 ($225,000 x 98%). Therefore, the cash disbursements for purchases that would appear in the April cash budget would be $220,500, which is option D.

The Following Are Budgeted Data for the Bingham Corporation, a Merchandising