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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