Use the Information Below to Answer the Following Question(s)

question 220

Multiple Choice

Use the information below to answer the following question(s) .
Layne Cedar manufactures cedar chests. The estimated number of chests for the first three months of 2016 is as follows:

Finished goods inventory at the end of December is 3,000 units. Ending finished goods are equal to 30 percent of next month's sales. April 2016 sales are expected to total 16,000 units.
-How many chests should be budgeted to be produced in the first quarter of 2016?

• A) 37,000 chests
• B) 41,800 chests
• C) 38,800 chests
• D) 48,400 chests

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Definitions:

Bad Debts

Accounts receivable that a company does not expect to collect because customers are unable to pay their debts.

Credit Sales

Sales made by a business where the payment is received after the sale has been made, typically recorded as accounts receivable.

Adjustment

Entries made in preparing financial statements to allocate expenses or revenues to the appropriate accounting period.

Aging Report

A financial report that categorizes a company's accounts receivable according to the length of time an invoice has been outstanding.