(13) What is the balance of Accounts Receivable on February 28? $48,000 $84,000 $80,000 $64,000 (14) What is the balance of Prepaid Insurance on January 31? $0 $26,400 $28,800 $27,600 (15) What is the balance of Inventory on February 28? $9,600 $40,300 $6,300 $6,000 (16) What is the balance of Land on February 28? $12,800 $0 $4,000 1. Sales are expected to be $80,000 in January, $100,000 in February, and $105,000 in March. 2. All sales are on credit and it collects 20% of all sales in the month of the sale, the remaining 80% in the month after the sale. 3. The cost of goods sold is equal to 40% of sales. 4. The company likes to keep an ending inventory on hand equal to 15% of next month's cost of goods sold. 5. All purchases of inventory are on account, and the company pays for 60% of all purchases in the month of the purchase, 40% in the month after the purchase. 6. The company pays its sales force a commission equal to 3% of sales. 7. The company also believes that its miscellaneous expense is equal to $500 plus 2% of sales. 8. Rent is $2,000 per month, Supplies are $600 per month and Depreciation is $1,800 per month 9. On January 1st, the company purchased an insurance policy covering 24 months for $28,800. 10. All selling and administrative expenses are paid in the month they are incurred except for commissions that are paid in the month after they are earned and the insurance which is paid two year in advance. 11. The company purchased $4,000 of Land on February 18th. They peld cash for the land. 12. Interest on long-term debt is equal to 1% of the beginning balance and is paid each month. The company must maintain a minimum balance in cash of $15,000 and will use any cash surplus to pay down long-term debt. The company borrows cash in $1,000 increments 13. The company is subject to a 30% Income tax rate. The company pays Income taxes in the month ofter they are accrued (expensed) 14. The company's Board of Directors declared a cash dividend of $950 on January 4th. The dividend will be paid on February 10th 15. The company had a beginning balance sheet (as of January 1) as follows: Assets Current Assets Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets Liabilities & SE Current Liabilities $16,000 Accounts Payable 48,000 Commissions Payable Olincome Taxes Payable 9,600 Dividends Payable 73,600 Total Current Liabilities $23,500 3,400 9,275 36,175 Long-term Debt 80,000 Property, Plant & Equipment Equipment Land Accumulated Depreciation Net PPE 95,000 Stockholders Equity 8,800 Common Stock _(25.000) Return Earnings 78,800 Total SE 26,225 10.000 36.225 $152,400 Total Assets $152,400 Total Liabilities & SE
