Sales of $550,000 Are Forecast for the Third Quarter

question 5

Multiple Choice

Sales of $550,000 are forecast for the third quarter. Gross profit is 40% of sales, and beginning inventory is $165,000. If ending inventory is budgeted as $215,000, what are the budgeted purchases?

• A) $270,000
• B) $330,000
• C) $165,000
• D) $380,000

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Definitions:

Checking Account

A bank account that allows for easy access to funds through checks and electronic means for everyday transactions.

Creditor

An entity or person that lends money or extends credit to another party, expecting repayment in the future.

Deposit Agreement

A contract between a customer and a bank setting forth terms and conditions for deposit accounts.

Good Faith

An honest intent to act without taking an unfair advantage over another party, often highlighted in contracts and negotiations.