Question
A firm expects to achieve the following level of sales, to make the following purchases of raw materials, and to make the following payments for
A firm expects to achieve the following level of sales, to make the following purchases of raw materials, and to make the following payments for indirect expenses for the first 4 months of the year. All sales and purchases of raw materials are on credit. 90% of sales are paid for in the month after the sale, with the balance paid in the following month. 70% of purchases are paid for in the month after the purchase, with the balance paid in the following month. Indirect expenses are paid for in the month they are incurred.
Sales in December totalled $71 and purchases of raw materials in December totalled $54. The opening cash balance at the beginning of January was $119. What is the budgeted closing balance of accounts receivable (rounded to the nearest dollar) at the end of April?
Jan | Feb | Mar | Apr | |
Sales | 71 | 77 | 73 | 72 |
Purchases of raw materials | 50 | 58 | 51 | 51 |
Indirect expenses | 13 | 15 | 18 | 13 |
a.
$73
b.
$75
c.
$79
d.
$78
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