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 45 days. The accounts payable balance at the beginning of Quarter 1 is $39,500. The expected sales are: Quarter 1 = $32,000; Quarter 2 = $34,500; Quarter 3 = $40,600; Quarter 4 = $50,200. What is the amount of the expected disbursements for Quarter 2? Assume a 360-day year.
A) $19,280
B) $20,470
C) $22,530
D) $25,220
E) $19,950
C) $22,530
Explanation: Quarter 2 disbursements = 45/90(Quarter 2 purchases) + 45/90(Quarter 1 purchases)
Quarter 2 disbursements = 45/90(.60)(Quarter 3 sales) + 45/90(.60)(Quarter 2 sales)
Quarter 2 disbursements = 45/90(.60)($40,600) + 45/90(.60)($34,500)
Quarter 2 disbursements = $22,530
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