Questions -
Q1. Oakton Furniture provided the following information relevant to its sales for December 2013 and the first quarter of 2014
Based on the company's collection history, 2% of credit sales are uncollectible, 40% are collected in month of sale and the remainder is collected in the following month. Total budgeted cash receipts in February 2014 are expected to be:
$60,000.
$346,400.
$162,400.
$228,000.
Q2. Browning Company's sales budget shows the following expected total sales:
Month - Sales
January $20,000
February $35,000
March $40,000
April $45,000
The company expects 70% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 69% in the month following the sale with the remainder being uncollectible and written off. The total cash inflows from sales in April would be:
$30,725.
$28,200.
$40,695.
$23,625.
Q3. Chu Company provided the following information related to its inventory sales and purchases for December 2013 and the first quarter of 2014:
Desired ending inventory levels are 25% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2014 would be:
$165,000.
$225,000.
$135,000.
$180,000.