27

Assume a merchandising companys estimated sales for January, February, and March are $101,000, $121,000, and $111,000, respectively. Its cost of goods sold is always 60% of its sales. The company always maintains ending merchandise inventory equal to 15% of next months cost of goods sold. It pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the subsequent month. What are the cash disbursements for merchandise purchases that would appear in the companys cash budget for February?

Multiple Choice

• $68,190

• $65,190

• $67,190

• $62,190

26

Assume the following budgeted information for a merchandising company:

• Budgeted sales (all on credit) for November, December, and January are $254,000, $224,000, and $215,000, respectively.
• Cash collections of credit sales are expected to be 70% in the month of sale and 30% in the month following the sale.
• The cost of goods sold is always 65% of sales.
• Each months ending inventory equals 15% of next months cost of goods sold.
• 40% of each months merchandise purchases are paid in the current month and the remainder is paid in the following month.
• Monthly selling and administrative expenses that are paid in cash in the month incurred total $28,000.
• Monthly depreciation expense is $27,500.

The expected cash collections from customers in December are:

Multiple Choice

• $221,300.

• $263,700.

• $247,285.

• $233,000.

25

Assume a companys sales budget for July estimates 16,800 units sold. The variable selling and administrative expense used for budgeting purposes is $4.00 per unit sold. The total budgeted cash disbursements for selling and administrative expenses in July is $137,000. The total fixed selling and administrative expenses included in the selling and administrative expense budget for July is $98,000. What is the amount of depreciation included in the selling and administrative expense budget for July?

Multiple Choice

• $44,800

• $28,200

• $14,200

• $30,800