Assume a merchandising company's estimated sales for January, February, and March are $105,000, $125,000, and $115,000, respectively. Its cost of goods sold is always 60% of its sales. The company always maintains ending merchandise inventory equal to 15% of next month's cost of goods sold. It pays for 20% of its merchandise purchases in the month of the purchase and the remaining 80% in the subsequent month. What are the cash disbursements for merchandise purchases that would appear in the company's cash budget for February?

Assume a merchandising company's estimated sales for January, February, and March are $105,000, $125,000, and $115,000, respectively. Its cost of goods sold is always 60% of its sales. The company always maintains ending merchandise inventory equal to 15% of next month's cost of goods sold. It pays for 20% of its merchandise purchases in the month of the purchase and the remaining 80% in the subsequent month. What are the cash disbursements for merchandise purchases that would appear in the company's cash budget for February?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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