Exhibit 9-1
Sporting Inc -Refer to Exhibit 9-1

question 46

Multiple Choice

Exhibit 9-1
Sporting Inc.is a distributor which sells one product for $100 per unit.Sporting pays $60 to buy the product.In addition,fixed costs total $60,000 per month.Sporting wishes to maintain an inventory at the end of each month equal to 30% of the next month's projected sales.Purchases are paid in the month after purchase.
Sporting makes all sales on credit and collects 40% in the month of sale and 60% in the month after sale.Budgeted monthly sales in units for the first five months of 2013 are as follows:
$\begin{array}{ll}\text { January } & 10,000 \text { units } \\\text { February } & 15,000 \text { units } \\\text { March } & 18,000 \text { units } \\\text { April } & 20,000 \text { units } \\\text { May } & 16,000 \text { units }\end{array}$
-Refer to Exhibit 9-1.What will accounts receivable be at the end of February?

• A)$600,000
• B)$900,000
• C)$1,500,000
• D)$405,000
• E)None of the answer choices is correct.

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Definitions:

Ending Inventory

The total value of all inventory still available for sale at the end of an accounting period.

Income Statement

An Income Statement is a financial statement that shows a company's revenues and expenses over a specified period, culminating in net profit or loss.

Periodic FIFO

Periodic FIFO (First-In, First-Out) is an inventory costing method used to calculate the cost of goods sold, assuming that the oldest inventory items are sold first.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding new purchases to the beginning inventory and subtracting the cost of goods sold.