Wolverine,Inc

question 70

Multiple Choice

Wolverine,Inc.began operations on January 1 of the current year with a $12,000 cash balance.Forty percent of sales are collected in the month of sale;60% are collected in the month following sale.Similarly,20% of purchases are paid in the month of purchase,and 80% are paid in the month following purchase.The following data apply to January and February:
If operating expenses are paid in the month incurred and include monthly depreciation charges of $2,500,determine the change in Wolverine's cash balance during February.

• A)$2,000 increase.
• B)$4,500 increase.
• C)$5,000 increase.
• D)$7,500 increase.
• E)Some other amount.

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Definitions:

Price Decline

Price decline refers to a decrease in the value or cost of an asset or commodity over a period, often influenced by market conditions or changes in supply and demand.

Write Down

The reduction in the book value of an asset when its fair market value has fallen below its current book value.

Accountants

Professionals who perform accounting functions such as audits or financial statement analysis according to prescribed methods.

Inventory Valuation Method

The approach a company uses to determine the cost of its inventory, affecting the cost of goods sold and profitability; common methods include FIFO, LIFO, and weighted average.