Ned's Co Has an Average Collection Period of 45 Days and and an Operating

question 252

Multiple Choice

Ned's Co. has an average collection period of 45 days and an operating cycle of 130 days. It has a policy of keeping at least $10 on hand as a minimum cash balance, and has a beginning cash balance for the first quarter of $20. Beginning receivables for the quarter amount to $35. Sales for the first and second quarters are expected to be $110 and $125, respectively, while purchases amount to 80% of the next quarter's forecast sales. The accounts payable period is 90 days.

What are cash collections in the first quarter?

• A) $35
• B) $72
• C) $85
• D) $90
• E) $110

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Definitions:

Empirically Derived Testing

A method of creating assessment tools based on data collected from experiments or observations, as opposed to theory-based methods.

Projective Testing

A psychological assessment tool that uses ambiguous stimuli to elicit responses that reveal aspects of an individual’s personality.

Personality Trait

enduring characteristics or qualities that describe an individual's behavior across different situations.

Self-Serving Bias

The common tendency to attribute one's successes to personal qualities and failures to external factors, protecting self-esteem.