Walker Entertainment Is a Distributor of Video Games and Expects

question 102

Multiple Choice

Walker Entertainment is a distributor of video games and expects its video game sales to be as follows for the first 4 months of 2014: $$\begin{array} { l l } \text { January } & \$ 100,000 \\\text { February } & \$ 150,000 \\\text { March } & \$ 180,000 \\\text { April } & \$ 200,000\end{array}$$ Walker's cost of goods sold is 70% of sales. Ending inventory is expected to equal 40% of the next month's cost of goods sold. How much are budgeted inventory purchases for March?

• A) $84,000
• B) $131,600
• C) $126,000
• D) $112,000

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Definitions:

Dividends Paid

The portion of a company's earnings distributed to shareholders, usually in the form of cash or additional shares.

Cash Flow

The sum of funds flowing in and out of a company, notably influencing its ability to meet short-term obligations.

Investing Activities

Transactions involving the purchase or sale of long-term assets and investments, a component of a company's cash flow statement.

Equipment

Tangible, long-term assets used in the operation of a business to produce goods or provide services, usually subject to depreciation over their useful lives.