1.     The Willsey Merchandise Company has budgeted \$40,000 in sales for the month of December. The company’s cost of goods sold is 30% of sales. If the company has budgeted to purchase \$18,000 in merchandise during December, then the budgeted change in inventory levels over the month of December is:
A. \$6,000 increase
B. \$10,000 decrease
C. \$22,000 decrease
D. \$15,000 increase

2.     Sam’s Toys budgeted sales of \$300,000 for the month of November and cost of goods sold equal to 80% of sales. Beginning inventory for November was \$50,000 and ending inventory for November is estimated at \$55,000. How much are the budgeted purchases for November?

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A) \$245,000

B) \$65,000

C) \$235,000

D) \$135,000

3.     BusyBody Company expects its November sales to be 20% higher than its October sales of \$180,000. Purchases were \$110,000 in October and are expected to be \$160,000 in November. All sales are on credit and are collected as follows: 35% in the month of the sale and 60% in the following month. Purchases are paid 40% in the month of purchase and 60% in the following month. The cash balance on November 1 is \$13,500. The cash balance on November 30 will be

A) \$4,100.

B) \$53,600.

C) \$67,100.

D) \$40,100.

Cave Hardware’s forecasted sales for April, May, June, and July are \$200,000, \$230,000, \$190,000, and \$240,000, respectively. Sales are 65% cash and 35% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 75% of sales and ending inventory is maintained at \$60,000 plus 10% of the following month’s cost of goods sold. All inventory purchases are paid 22% in the month of purchase and 78% in the following month.

4.     What are the cash collections budgeted for June?

A) \$150,500

B) \$193,500

C) \$123,500

D) \$204,000

5.     What are the budgeted cash payments in June for inventory purchases?

A) \$495,000

B) \$315,750

C) \$164,385

D) \$167,415

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