Assume a merchandising company's estimated sales for January, February, and March are $107,000, $127,000, am $117,000, respectively. Its cost of goods sold is always 60% of its sales. The company always maintains ending merchandise inventory equal to 20% of next month's cost of goods sold. It pays for 20% of its merchandise purch in the month of the purchase and the remaining 80% in the subsequent month. What are the cash disbursements 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 $107,000, $127,000, am $117,000, respectively. Its cost of goods sold is always 60% of its sales. The company always maintains ending merchandise inventory equal to 20% of next month's cost of goods sold. It pays for 20% of its merchandise purch in the month of the purchase and the remaining 80% in the subsequent month. What are the cash disbursements merchandise purchases that would appear in the company's cash budget for February?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Rahul
Transcribed Image Text:Assume a merchandising company's estimated sales for January, February, and March are $107,000, $127,000, and
$117,000, respectively. Its cost of goods sold is always 60% of its sales. The company always maintains ending
merchandise inventory equal to 20% 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?
Multiple Choice
$70,280
$71,280
$68,280
$65,280
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