Rival Company Purchases Merchandise on Account

question 135

Essay

Rival Company purchases merchandise on account. In general, the company pays 50% in the month of purchase and 50% in the following month. All payments in the month of purchase qualify for a 2% cash discount. First quarter budgeted purchases are:
January $90,000
February 80,000
March 96,000
Required:
A. Calculate the total cash disbursements expected in February.
B. Calculate the total cash disbursements expected in March.
C. Suppose that there is no cash discount for purchases made in the month of purchase. Recalculate the total cash disbursements expected in February and March.

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Definitions:

Routine Activity

Regular, customary actions or practices that are often predictable and performed as a part of one's daily or regular schedule.

Payroll

The total amount of wages or salaries paid by a business to its employees, as well as the process of calculating and distributing these payments.

Transactional

Pertaining to the conduct of business, especially routine activities involving the transfer or exchange of goods and services.

Talent Management

A strategic approach to attracting, developing, and retaining skilled employees to meet organizational needs.