Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the compacost of goods sold is 60% of sales. Expected sales for the first four months appear below.January.......February.....March.........April ............Expected Sales$10,000$24,000$4,800O $3,200O $9,600O $7,500$16,000$25,000The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paithe month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balacollected in the following month. Variable selling and administrative expenses should be 10% of sales and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable selling andadministrative expenses are made during the month the expenses are incurred.In a budgeted balance sheet, the Merchandise Inventory on February 28:

The cost of goods sold records the cost of goods that are sold during the period. The ending…

cost of goods sold is 60% of sales. Expected sales for the first four months appear below. Expected Sales $10,000 $24,000 $16,000 $25,000 January........ February..... March........... April ............ The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be p the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the bal collected in the following month. Variable selling and administrative expenses should be 10% of sales and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable selling and administrative expenses are made during the month the expenses are incurred. In a budgeted balance sheet, the Merchandise Inventory on February 28: O $4,800 O $3,200 O$9,600 O $7,500

cost of goods sold is 60% of sales. Expected sales for the first four months appear below. Expected Sales $10,000 $24,000 $16,000 $25,000 January........ February..... March........... April ............ The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be p the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the bal collected in the following month. Variable selling and administrative expenses should be 10% of sales and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable selling and administrative expenses are made during the month the expenses are incurred. In a budgeted balance sheet, the Merchandise Inventory on February 28: O $4,800 O $3,200 O$9,600 O $7,500

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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amm.01
Subject: acounting