Assume a merchandising company's estimated sales for January, February, and March are $119,000, $139,000, and $129,000, respectively. Its cost of goods sold is always 45% of its sales. The company always maintains ending merchandise inventory equal to 20% of next month's cost of goods sold. It pays for 20% of its merchandise purchases in the month of the purchase and the remaining 80% in the subsequent month. What are the cash disbursements for merchandise purchases that would appear in the company's cash budget for February?
Assume a merchandising company's estimated sales for January, February, and March are $119,000, $139,000, and $129,000, respectively. Its cost of goods sold is always 45% of its sales. The company always maintains ending merchandise inventory equal to 20% of next month's cost of goods sold. It pays for 20% of its merchandise purchases in the month of the purchase and the remaining 80% in the subsequent month. What are the cash disbursements for merchandise purchases that would appear in the company's cash budget for February?
Chapter15: Managing Short-term Assets
Section: Chapter Questions
Problem 15PROB
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