Ned's Co Has an Average Collection Period of 45 Days and and an Operating

question 46

Multiple Choice

Ned's Co. has an average collection period of 45 days and an operating cycle of 130 days. It has a policy of keeping at least $10 on hand as a minimum cash balance, and has a beginning cash
Balance for the first quarter of $20. Beginning receivables for the quarter amount to $35. Sales for
The first and second quarters are expected to be $110 and $125, respectively, while purchases
Amount to 80% of the next quarter's forecast sales. The accounts payable period is 90 days.
What is the value of the payables account at the end of the first quarter?

• A) $88
• B) $100
• C) $110
• D) $112

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