VVV Company has the following sales budget January 200,000 February 240,000 March 300,000 April 360,000 Cost of sales is 70% of sales. Sales are collected 40% in the month of sale and 60% in the following month. VVV keeps inventory equal to double the coming month's budgeted sales requirements. It pays for purchases 80% in the month of purchase and 20% in the month after purchase. Inventory at the beginning of January is $190,000. VVV has monthly fixed costs of $30,000 including $6,000 depreciation. Fixed costs requiring cash are paid as incurred.

VVV Company has the following sales budget January 200,000 February 240,000 March 300,000 April 360,000 Cost of sales is 70% of sales. Sales are collected 40% in the month of sale and 60% in the following month. VVV keeps inventory equal to double the coming month's budgeted sales requirements. It pays for purchases 80% in the month of purchase and 20% in the month after purchase. Inventory at the beginning of January is $190,000. VVV has monthly fixed costs of $30,000 including $6,000 depreciation. Fixed costs requiring cash are paid as incurred.

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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