During Year 1, OldTowne issued $3,000,000 of purchase orders for various contracts and purchases. There were properly charged to encumbrances at the time. Purchases related to appropriation in one year often are not received until the next year. Oldtowne received $1,250,000 of the goods and services it originally ordered. Invoices of $750,000 weree paid during Year 1. 

If Old Towne is normally given credit terms of 60 days and it expects to receive the rest of the goods and services it ordered early in Year 2.

What is the amount of cash OldTowne expect to have to pay in Year 2 related to Year 1 Orders?

Answer rating: 100% (QA)

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