38. Diego makes all purchases on account, subject to the following payment pattern:

Paid in the month of purchase: 30%

Paid in the first month following purchase: 60%

Paid in the second month following purchase: 10%

If purchases for January, February, and March were $200,000, $180,000, and $230,000, respectively, what were the firm's budgeted payments in March?

A. $69,000.

B. $138,000.

C. $177,000.

D. $197,000.

E. Some other amount.

Answer: D

39. Brooklyn makes all purchases on account, subject to the following payment pattern:

Paid in the month of purchase: 30%

Paid in the first month following purchase: 65%

Paid in the second month following purchase: 5%

If purchases for April, May, and June were $200,000, $160,000, and $250,000, respectively, what was the firm's budgeted payables balance on June 30?

A. $175,000.

B. $179,000.

C. $183,000.

D. $189,000.

E. Some other amount.

Answer: C

40. Wolfe, Inc., began operations on January 1 of the current year with a $12,000 cash balance. Forty percent of sales are collected in the month of sale; 60% are collected in the month following sale. Similarly, 20% of purchases are paid in the month of purchase, and 80% are paid in the month following purchase. The following data apply to January and February:

	January		February
Sales	$35,000		$55,000
Purchases	30,000		40,000
Operating expenses	7,000		9,000

If operating expenses are paid in the month incurred and include monthly depreciation charges of $2,500, determine the change in Wolfe's cash balance during February.

A. $2,000 increase.

B. $4,500 increase.

C. $5,000 increase.

D. $7,500 increase.

E. Some other amount.

Answer: B

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