1)

Ned's Co. has an average collection period of 45 days and an operating cycle of 130

days. It has a policy of keeping at least $10 on hand as a minimum cash balance, and has a

beginning cash balance for the first quarter of $20. Beginning receivables for the quarter

amount to $35. Sales for the first and second quarters are expected to be $110 and $125,

respectively, while purchases amount to 80% of the next quarter's forecast sales. The accounts

payable period is 90 days.

What are cash disbursements for the first quarter?

A. $76

B. $88

C. $92

D. $100

E. $110

Please explain the answer

2)

KNF, Inc. pays its creditors in 45 days. Inventory is purchased one quarter prior to its

sale. Cost of goods sold is equal to 50% of the selling price. Each quarter the total that KNF

must pay on its accounts is equal to:

A. 50% of the prior quarter sales plus 50% of the current quarter sales.

B. The beginning accounts payable balance plus 50% of the prior quarter sales.

C. The beginning accounts payable balance plus 25% of the prior quarter sales.

D. 25% of the prior quarter purchases plus 25% of the current quarter purchases.

E. 25% of the current quarter sales plus 25% of the prior quarter sales.

Please elaborate the answer