Required Information Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget....

Transcribed Image Text:

Required Information 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. Assets Inc. Balance Sheet March 31 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 $ 92,000 130,000 48,600 216,000 $ 486,600 $ 77,000 329,000 80,600 $ 486,600 accountants have made the following estimates: 1. Sales for April, May, June, and July will be $270,000, $290,000, $280,000, and $300,000, respectively. 2. 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. 3. Each month's ending inventory must equal 30% of next month's cost of goods sold. The cost of goods sold is 60% 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. 4. Monthly selling and administrative expenses are always $50,000. Each month $5,000 of this total amount is depreciation expense and the remaining $45,000 is spent for expenses that are paid in the month they are incurred. 5. 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 $165,600 $171,600 $172,200 $222,000 Required Information 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. Assets Inc. Balance Sheet March 31 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 $ 92,000 130,000 48,600 216,000 $ 486,600 $ 77,000 329,000 80,600 $ 486,600 accountants have made the following estimates: 1. Sales for April, May, June, and July will be $270,000, $290,000, $280,000, and $300,000, respectively. 2. 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. 3. Each month's ending inventory must equal 30% of next month's cost of goods sold. The cost of goods sold is 60% 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. 4. Monthly selling and administrative expenses are always $50,000. Each month $5,000 of this total amount is depreciation expense and the remaining $45,000 is spent for expenses that are paid in the month they are incurred. 5. 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 $165,600 $171,600 $172,200 $222,000