Required Information TES-417 Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has the following balance sheet as of March 31 TES-417 Inc. Balance Sheet March 31 Assets Cash $82,000 Accounts receivable 129,000 52.500 Inventory Plant and equipment, not of depreciation 217,000 Total assets $ 480,500 Liabilities and Stockholders' Equity Accounts payable $ 78,000 Common stock 347,000 Retained earnings Total liabilities and stockholders' equity TES-417 accountants have made the following estimates: 1. Sales for April, May, June, and July will be $280,000, $300,000, $290,000, and $310,000, respectively. 2. All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at March 31 will be collected in April 3. Each month's ending inventory must equal 25% of next month's cost of goods sold. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the account payable at March 31 are related to previous merchandise purchases and will be paid in April. 4. Monthly selling and administrative expenses are always $52.000. Each month $5,000 of this total amount is depreciation expense and the remaining $47,000 is spent for expenses that are paid in the month they are incurred. 5. The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock or repurchase its own stock during the 2nd quarter How much is the company's expected total Net Operating Income for the 2nd quarter ending on June 30? Multiple Choice ο ο ο ο $217,500 $61.500 $714.000 $870,000
Required Information TES-417 Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has the following balance sheet as of March 31 TES-417 Inc. Balance Sheet March 31 Assets Cash $82,000 Accounts receivable 129,000 52.500 Inventory Plant and equipment, not of depreciation 217,000 Total assets $ 480,500 Liabilities and Stockholders' Equity Accounts payable $ 78,000 Common stock 347,000 Retained earnings Total liabilities and stockholders' equity TES-417 accountants have made the following estimates: 1. Sales for April, May, June, and July will be $280,000, $300,000, $290,000, and $310,000, respectively. 2. All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at March 31 will be collected in April 3. Each month's ending inventory must equal 25% of next month's cost of goods sold. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the account payable at March 31 are related to previous merchandise purchases and will be paid in April. 4. Monthly selling and administrative expenses are always $52.000. Each month $5,000 of this total amount is depreciation expense and the remaining $47,000 is spent for expenses that are paid in the month they are incurred. 5. The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock or repurchase its own stock during the 2nd quarter How much is the company's expected total Net Operating Income for the 2nd quarter ending on June 30? Multiple Choice ο ο ο ο $217,500 $61.500 $714.000 $870,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required Information
TES-417 Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has the
following balance sheet as of March 31.
TES-417 Inc.
Balance Sheet
March 31
Assets
Cash
$ 82,000
Accounts receivable
Inventory
129,000
52,500
Plant and equipment, net of depreciation
217,000
Total assets
$ 480,500
Liabilities and Stockholders' Equity
Accounts payable
$ 78,000
Common stock
347,000
Retained earnings
Total liabilities and stockholders' equity
TES-417 accountants have made the following estimates:
1. Sales for April, May, June, and July will be $280,000, $300,000, $290,000, and $310,000, respectively.
2. All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at March 31 will be collected in April.
3. Each month's ending inventory must equal 25% of next month's cost of goods sold. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts
payable at March 31 are related to previous merchandise purchases and will be paid in April.
4. Monthly selling and administrative expenses are always $52,000. Each month $5,000 of this total amount is depreciation expense and the remaining $47,000 is spent for expenses that are paid in the month they are incurred.
5. The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock or repurchase its own stock during the 2nd quarter.
How much is the company's expected total Net Operating Income for the 2nd quarter ending on June 30?
Multiple Choice
OOOO
$217,500
$61,500
$714,000
$870,000
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