Justin's Plant Store, a Retailer, Started Operations on January 1

question 46

Multiple Choice

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: $\begin{array} { |l | r | } \hline & \text { Expected Sales } \\\hline \text { January } & \$ 10,000 \\\hline \text { February } & 24,000 \\\hline \text { March } & 16,000 \\\hline \text { April } & 25,000 \\\hline\end{array}$ 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.
-What would be the accounts receivable balance that would appear in the March 31 budgeted balance sheet?

• A) $8,800.
• B) $12,400.
• C) $15,000.
• D) $16,000.

Understand the concept and calculation of Net Liquid Balance (NLB) in a company.

Acquire knowledge about different bankruptcy processes and their implications.

Identify strategies to maintain and increase liquidity and cash availability in a firm.

Comprehend how effective group communication contributes to the success of entrepreneurial firms.

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Definitions:

Intercultural Sensitivity

The awareness, understanding, and appreciation of cultural differences and the ability to adapt one's behavior accordingly.

Acceptance Stage

is a phase in various models of psychological processes where an individual recognizes and accepts the reality of a situation.

Competitive

A characteristic of businesses or individuals that strive to provide products or services in a manner that outperforms their rivals.

Type A Orientation

The way people are characterized as competitive, impatient, aggressive, and achievement oriented.