Assume a merchandising company's estimated sales for January, February, and March are $106,000 $126,000, and $116,000, respectively. Its cost of goods sold is always 35% of its sales. The company always maintains ending merchandise inventory equal to 20% of next month's cost of goods sold. It pays for 25% of its merchandise purchases in the month of the purchase and the remaining 75% in the subsequent month. What are the cash disbursements for merchandise purchases that would appear in the company's cash budget for February? Multiple Choice $41,725 O $42,725 $39,725 $36,725
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
![Assume a merchandising company's estimated sales for January, February, and March are $106,000,
$126,000, and $116,000, respectively. Its cost of goods sold is always 35% of its sales. The company
always maintains ending merchandise inventory equal to 20% of next month's cost of goods sold. It
pays for 25% of its merchandise purchases in the month of the purchase and the remaining 75% in
the subsequent month. What are the cash disbursements for merchandise purchases that would
appear in the company's cash budget for February?
Multiple Choice
$41,725
O $42,725
$39,725
O $36,725](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe0d94551-112d-40a3-b72d-4ab09ae67b90%2F57e8101d-b215-43e7-9780-d46e372522b4%2Fqq17vjr_processed.png&w=3840&q=75)
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