(Appendix 10A) Gold Company Has the Following Balances at December

question 11

Multiple Choice

(Appendix 10A) Gold Company has the following balances at December 31, 20x4: Cash $6,000; accounts receivable $34,000 ($10,000 from November and $24,000 from December) ; merchandise inventory $40,000; and accounts payable $20,000 (for merchandise purchases only) . Budgeted sales follow: $$\begin{array} { l r } \text { January } & \$ 50,000 \\\text { February } & 90,000 \\\text { March } & 60,000 \\\text { April } & 100,000\end{array}$$ Other data:
*Sales are 40% cash, 50% collected during the following month, and 10% collected during the second month after sale. A 3% cash discount is given on cash sales.
*Cost of goods sold is 40% of sales.
*Ending inventory must be 140% of the next month's cost of sales.
*Purchases are paid 70% in month of purchase and 30% in the following month.
*The selling and administrative cost function is: $6,000 + $0.2 × sales. This includes $1,000 for amortization.
*All costs are paid in the month incurred.
*Minimum cash balance requirement is $6,000.
The cash disbursements for purchases in March are:

• A) $46,400
• B) $32,480
• C) $38,240
• D) $48,720

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