Reference: 07-03
Information on the Actual Sales and Inventory Purchases

question 41

Multiple Choice

Reference: 07-03
Information on the actual sales and inventory purchases of the Law Company for the first quarter follows: $$\begin{array} { | l | l | l | } \hline & \text { Sales } & \begin{array} { l } \text { Inventory } \\\text { Purchases }\end{array} \\\hline \text { January } & \$ 120,000 & \$ 60,000 \\\hline \text { February } & \$ 100,000 & \$ 78,000 \\\hline \text { March } & \$ 130,000 & \$ 90,000 \\\hline\end{array}$$ Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.
The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March
1 was $43,000, and on April 1 was $35,000.
-The expected cash disbursements during April for inventory purchases would be:

• A)$97,000.
• B)$100,000.
• C)$87,300.
• D)$90,000.

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Definitions:

Consultative Decision

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Group Decision

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An authority decision is a decision made by the leader and then communicated to the group.

Leader-Member Relations

The dynamic and quality of the interaction and relationship between a leader and their team members, influencing team cohesion and performance.