Nformation on the Actual Sales and Inventory Purchases of the Law

question 84

Multiple Choice

nformation on the actual sales and inventory purchases of the Law Company for the first quarter follow:
$\begin{array} { | l | r | r | } \hline & \text { Inventory Sales } & \text { Purchases } \\\hline \text { January } & \$ 120,000 & \$ 60,000 \\\hline \text { February } & 100,000 & 78,000 \\\hline \text { March } & 130,000 & 90,000 \\\hline\end{array}$
Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.

The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000.



-What would be the expected cash collections from customers during April?

• A) $117,600.
• B) $137,000.
• C) $139,000.
• D) $150,000.

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Definitions:

Medical Care

The diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans, provided by health professionals.

Housing

The structures or accommodations in which people live, including houses, apartments, and other residential units.

Producer Price Index

An economic indicator that measures the average change over time in the selling prices received by domestic producers for their output.

Basket Of Goods

A fixed set of consumer products and services valued on a regular basis for the purpose of tracking inflation through the consumer price index (CPI).