1 Colly Inc pays 20 of the cost of purchases in the month pu

1. Colly, Inc. pays 20% of the cost of purchases in the month purchased and 60% in the month after and 40% in the month after that, how much cash will be disbursed in the month after a $108,000 purchase.

A. $64,800

B. $21,600

C. $43,200

D. none of the above

My Answer: A, 60% of $108,000=$64,800.00

Solution

since Colly, Inc. pays 20% of the cost of purchases in the month purchased,

given Colly, Inc. purchases $108,000

then it will pay ((108,000) X (20/100)) = $21,600.

That is $21,600 cash will be disbursed in the month after a $108,000 purchase.

hence option (B).