Discus Productions Needs to Know Its Anticipated Cash Inflows for the Next

question 106

Multiple Choice

Discus Productions needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10 percent of total sales each month. Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale. Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000. Accounts receivable on March 31 were $60,000.
Discus Productions would expect to have an accounts receivable balance on June 30 of

• A)$37,800.
• B)$42,000.
• C)$32,000.
• D)$28,800.

Calculate and understand the implications of the current ratio and acid-test ratio for business liquidity.

Understand the calculation and business implications of the acid-test ratio.

Calculate the acid-test ratio based on given financial information.

Understand the function and calculation of the gross margin ratio.

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