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

question 68

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 operating expenses would be:

• A)$15,000.
• B)$23,000.
• C)$38,000.
• D)$30,000.

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Definitions:

Promotion

The advancement of an employee to a higher job position or rank within the organization, often accompanied by increased responsibilities and salary.

Norm of Reciprocity

A social rule suggesting that people should repay, in kind, what another person has provided for them; this is the basis for the exchange of goods, services, and acts of kindness.

Perceived Support

The extent to which individuals believe that their social network provides love, care, esteem, and assistance.

Organization Achieve

The successful accomplishment of goals and objectives by a group or an entity, often through effective planning, leadership, and management.