Rainbow Legacy Ltd Has the Following Balances at 31^st December

question 97

Multiple Choice

Rainbow Legacy Ltd has the following balances at 31^st December 2019: Cash $46,000; accounts receivable $34,000 ($10,000 from November and $24,000 from December) ; merchandise inventory $40,000; and accounts payable $20,000 (for merchandise purchases only) . Budgeted sales follow:
$$\begin{array} { l l } \text { January } & \$ 100,000 \\\text { February } & \$ 180,000 \\\text { March } & \$ 120,000 \\\text { April } & \$ 200,000\end{array}$$ Other data:
-Sales are 40% cash, 50% collected during the following month, and 10% collected during the second month after sale. A 3% cash discount is given on cash sales
-Cost of goods sold is 40% of sales
-Ending inventory must be 150% of the next month's cost of sales
-Purchases are paid 70% in month of purchase and 30% in the following month
-The selling and administrative cost function is: $6,000 + $0.2 × sales. This includes $1,000 for depreciation
-All costs are paid in the month incurred
-Minimum cash balance requirement is $6,000
The cash disbursements for purchases in March are:

• A) $78,000
• B) $32,480
• C) $81,200
• D) $48,000

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Definitions:

Poisson Distribution

A probability distribution describing the likelihood of observing a certain number of events within a specified timeframe or area.

Hurricanes

Are intense tropical storms with powerful winds and heavy rain, characterized by a low-pressure center and numerous thunderstorms.

Probability

A measure of the likelihood that a particular event will occur, often expressed as a number between 0 and 1.

Poisson Distribution

A probability distribution that measures the likelihood of a given number of events happening in a fixed interval of time or space.