Reference: 07-02
Justin's Plant Store, a Retailer, Started Operations on January

question 83

Multiple Choice

Reference: 07-02
Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below. $$\begin{array} { | l | l | } \hline & \text { Expected Sales } \\\hline \text { January } & \$ 10,000 \\\hline \text { February } & 24,000 \\\hline \text { March } & 16,000 \\\hline \text { April } & 25,000 \\\hline\end{array}$$ The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the
next month's merchandise sales (stated at cost) . All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of
the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred.
-In a budget of cash disbursements for March, the total cash disbursements would be:

• A)$16,900.
• B)$22,300.
• C)$13,900.
• D)$11,200.

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Definitions:

ADHD

Attention Deficit Hyperactivity Disorder, a neurodevelopmental disorder characterized by patterns of inattention, impulsivity, and hyperactivity.

Specific Learning Disorder

A type of neurodevelopmental disorder that hinders the ability to learn or use specific academic skills, such as reading or mathematics.

Autism Spectrum Disorder

A developmental disorder characterized by difficulties in social interaction, communication, and by restricted and repetitive behaviors.

Multifinality

The principle in developmental psychology that similar early experiences can lead to different outcomes in individuals.