Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has the following balance sheet as of March 31

accountants have made the following estimates:

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 months 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 months ending inventory must equal 25% of next months cost of goods sold. The cost of goods sold is 75% of sales. The company pays for 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 or repurchase its own stock during the 2nd quarter.

How much is the company's expected merchandise purchases in the month of June?

Multiple Choice

$219,375

$168,750

$178,125

$176,250

Balance Sheet March 31 Assets Cash Accounts receivable Inventory Plant and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity 80,000135,00041,250211,000$467,250 $72,000345,000 $467,25050,250