Question

Weisbro and Sons purchases its inventory one quarter prior to the quarter of sale. The purchase price is 60 percent of the sales price. The accounts payable period is 60 days. The accounts payable balance at the beginning of Quarter 1 is $26,000. What is the amount of the expected disbursements for Quarter 2 given the following expected quarterly sales?
a. Quarter 1: $ 68,000
b. Quarter 2: $ 109,000
c. Quarter 3: $ 101,000
d. Quarter 4: $ 110,000

Answer 1

Answer:

Total disbursements     81,666.66

Explanation:

The company pays within 60 daysand a quarter has 90 days. Therefore; from each quarter 1/3 are paid within the quarter (days 1-30) The subsequent days, from day 31 to 90 are paid within the next quarter.

During Q2 we are going to pay a third of the Q1 sales

and two third of the current quarter.

         109,000 x  1/3 =      36,333.33

         68,000  x  2/3 =    45,333.33  

Total disbursements     81,666.66