Answer:
The correct option is B.
Explanation:
It is given that Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August.
Purchase in July = $180,000
Purchase in August = $210,000
Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase.
In August, the cash disbursements for materials purchases be 3/4th of $210,000 (Purchase in August) and 1/4 of $180,000 (Purchase in July).
August's cash disbursements for materials purchases be
[tex]Amount=\frac{3}{4}\times 210000+\frac{1}{4}\times 180000[/tex]
[tex]Amount=157500+45000[/tex]
[tex]Amount=202500[/tex]
The August's cash disbursements for materials purchases be $202500. Therefore the correct option is B.
