Question 20

Reference: 09-03

Information on the actual sales and inventory purchases of the Law Company for the first quarter follow:

Inventory SalesPurchasesJanuary$120,000$60,000February100,00078,000March130,00090,000Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.

The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000.

What would be the expected cash collections from customers during April?

Question 20 options:

A)

$150,000.

B)

$137,000.

C)

$139,000.

D)

$117,600.