Question
ABC is a retailer. Its f ollowing balance sheet as of March 31 accountants are preparing the company's 2nd quarter master budget. The company has
ABC is a retailer. Its following balance sheet as of March 31
accountants are preparing the company's 2nd quarter master budget. The company has the follwing balance sheet.
- Sales for April, May, June, and July will be $220,000, $240,000, $230,000, and $250,000, respectively.
- All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at March 31 will be collected in April.
- Each month's ending inventory must equal 25% of next month's cost of goods sold. The cost of goods sold is 75% of sales. The company pays fol 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at March 31 are related to previous merchandise purchases and will be paid in April.
- Monthly selling and administrative expenses are always $40,000. Each month $6,000 of this total amount is depreciation expense and the remaining $34.000 is spent for expenses that are paid in the month they are incurred
- The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock o repurchase its own stock during the 2nd quarter.
1-How much is the company's expected cash collections in the month of May?
$156000
$227000
$84000
$143000
2-How much is the company's expected cash disbursement for merchandise in the month of April?
$139500
$101250
$67500
$72000
3-How much is the company's expected merchandise purchases in the month of June?
$176250
$168750
$219375
$178125
4-How much is the company's expected Accounts Receivable balance on June 30?
$159500
$236500
$156000
$80500
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