Justin's plant store, a reatiler, 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 preperation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months are: January - $ 10,000 February - $24,000 March - $ 16,000 April $25,000 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 paid in 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 balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be during the month expenses are incurred. In a budget of cash disbursments for March, what would be the total cash disbursements?
Justin's plant store, a reatiler, 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 preperation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months are: January - $ 10,000 February - $24,000 March - $ 16,000 April $25,000 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 paid in 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 balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be during the month expenses are incurred. In a budget of cash disbursments for March, what would be the total cash disbursements?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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