Hiruit Company's Sales in December Were $5,500 Gross Margin Is 30

question 55

Multiple Choice

Hiruit company's sales in December were $5,500. They expect sales to increase 10% in January and February and 15% in March. All of its sales are made on credit. The typical collection pattern is:
$$\begin{array} { | l | c | } \hline \text { Collections } & \text { Percentage of total receivables } \\\hline \text { In month of sale } & 10 \% \\\hline \text { In second month } & 70 \% \\\hline \text { In third month } & 15 \% \\\hline \text { Not collectible } & 5 \% \\\hline\end{array}$$ Gross margin is 30%. Inventory levels at the end of December are $900 and are expected to grow at the same rate as sales. Purchases are paid for the month after they are made. Net accounts receivable at the end of December are $400.
-What is the anticipated inventory level at the end of March?

• A) $1,252.35
• B) $1,197.9
• C) $1,089
• D) $900

Learn the depreciation calculation for fixed assets using the straight-line method.

Understand the concepts of accrued expenses and revenues and their adjusting entries.

Comprehend the principles of periodic reporting and the time period assumption in accounting.

Understand the function and recording of adjusting entries in the accounting cycle.

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