Limelite Ltd, Projects Sales for Its First Three Months of Operation

question 11

Multiple Choice

Limelite Ltd, projects sales for its first three months of operation as follows: $$\begin{array} { | l | l | l | l | } \hline & \text { Jaruary } & \text { February } & \text { March } \\\hline \text { Credit Sales } & \$ 150,000 & \$ 188,000 & \$ 176,000 \\\hline \text { Cash Sales } & \$ 60,000 & \$ 50,000 & \$ 55,000 \\\hline & \$ 210,000 & \$ 238,000 & \$ 231,000 \\\hline\end{array}$$ Inventory on 1^st January is $40,000. Subsequent beginning inventories should be 40% of that month's cost of goods sold. Goods are priced at 140% of their cost. 50% of purchases are paid for in the month of purchase; the balance is paid in the following month. It is expected that 50% of credit sales will be collected in the month following sale, 30% in the second month following the sale, and the balance the third month. A 5% discount is given if payment is received in the month following sale.
What is the projected cost of purchases for January?

• A) $80,000
• B) $68,000
• C) $120,000
• D) $178,000

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Definitions:

Major Objection

A significant concern or issue raised by a potential buyer, which may prevent a sale unless it is effectively addressed.

Core Principles

Fundamental beliefs or guiding values that serve as the foundation for a system, organization, or individual's actions and decisions.

Professional Selling

The sale of products or services in a business-to-business context, often involving skilled salespeople and complex selling processes.

Prospect

A potential customer or client who has been identified as having the interest and ability to purchase a product or service.