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

question 15

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.
-In a budget of cash disbursements for March,what would be the total cash disbursements?

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

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Definitions:

Safety Pop-Off Valves

Valves designed to release pressure automatically to prevent damage or explosions in pressurized systems.

System Supply Tank

A reservoir or tank that holds fluid or fuel integral to the operation of a system, ensuring there is a sufficient supply for its functioning.

Compressor Unloader Circuit

A system within an air compressor that reduces load and pressure by allowing compressed air to bypass during start-up or when the desired pressure is reached.

Compressor Drive

Refers to the mechanism that transfers power from an engine or electric motor to a compressor, enabling it to pressurize air or refrigerant.